In a new twist that will affect the professional wrestling world as the FTC proposed a rule that would ban the use of non-compete clauses, which would help independent contractors.
As wrestling fans know, companies tend to have their talent sign non-compete clauses when they’re released to keep them from jumping to a new company as soon as they’re free from their contract.
FTC Proposes a Rule to Eliminate Non-Compete Clauses
It’s a practice that became prevalent after the 1990s and the Monday Night Wars between WWE and WCW where wrestlers would appear on one company the day they were released or their contracts ended.
The non-compete clause isn’t applied to contracts that end, but for those released it prevents them from jumping into new work.
While they may still be paid in some cases, there’s always the possibility they won’t be, and the new proposed rule would allow them to go right back to work elsewhere.
It would allow independent contractors to make an estimated $300 billion a year for 30 million independent contractors.
The rule
The FTC has shared their proposed rule via a press release and have opened it to public comment and opinion.
In part, the press release says:
“’Research shows that employers’ use of noncompetes to restrict workers’ mobility significantly suppresses workers’ wages—even for those not subject to noncompetes, or subject to noncompetes that are unenforceable under state law,” said Elizabeth Wilkins, Director of the Office of Policy Planning. “The proposed rule would ensure that employers can’t exploit their outsized bargaining power to limit workers’ opportunities and stifle competition.’
“The evidence shows that noncompete clauses also hinder innovation and business dynamism in multiple ways—from preventing would-be entrepreneurs from forming competing businesses, to inhibiting workers from bringing innovative ideas to new companies. This ultimately harms consumers; in markets with fewer new entrants and greater concentration, consumers can face higher prices—as seen in the health care sector.
“To address these problems, the FTC’s proposed rule would generally prohibit employers from using noncompete clauses. Specifically, the FTC’s new rule would make it illegal for an employer to: enter into or attempt to enter into a noncompete with a worker;maintain a noncompete with a worker; or represent to a worker, under certain circumstances, that the worker is subject to a noncompete.
“The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.
“The proposed rule would generally not apply to other types of employment restrictions, like non-disclosure agreements. However, other types of employment restrictions could be subject to the rule if they are so broad in scope that they function as noncompetes.”
What are your thoughts on the proposed rule? Let us know in the comments below.
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