Who owns your time, and who owns your experience? In this lesson, we're going to explore two major recent events in the U.S. that challenged the rules of work. To start, we'll watch a video about a controversial type of contract called a "noncompete agreement." As you watch, think about this question: What is the main argument for banning noncompetes?
The End of Non-competes Is Here
Source: More Perfect Union
Video Transcript
Today, you've made a major announcement that helps millions of workers in America. Tell us what that is. Today, the FTC has finalized a rule that will eliminate the vast majority of non-compete clauses in people's contracts. A non-compete clause is a provision that basically prevents people from taking a job with a competitor or starting a competing business, usually within a particular geographic area and for a certain period of time. So, around 30 million American workers are covered by a non-compete. [ 00:30 ]
The incredible number of non-compete clauses for ordinary people to keep wages low. And so we're talking about fast food workers, security guards, nurses. We're talking about engineers, journalists, veterinarians. These are really people across sectors, across income levels. "So I could not work in my field for one full year within that radius?" "Yes, and I hope nobody has to go through what I went through, because it was very, very emotional and very challenging." [ 01:10 ]
We heard from workers who were working at a casino, got a better offer at a competing casino with higher wages, but because of the non-compete, they were locked in place. We heard stories from veterinarians who had to uproot themselves multiple times, switching states all because a non-compete prevented them from being able to do business in the same state. [ 01:34 ]
When you think of the workers and the impact on their wages and earnings in America, what do you anticipate is going to happen as a result of this non-compete ban? Wages will go up. The average worker will make $529 more every year, which collectively means that tens of billions or hundreds of billions of dollars of wages will be going back to workers. Help people understand why that is. So if there's hundreds of billions of dollars increasing in the economy, how did that happen? [ 02:05 ]
That would happen because right now, workers are stuck in place because of these non-competes. And so even if they get a better job opportunity with higher wages, with better benefits, they can't actually switch jobs, which is bad for those workers. It's also bad for other workers who won't have the opportunities that are not being created because of these non-competes. So there's just less churn in the economy overall. There's less dynamism, and that means that wages are lower than they should be. [ 02:33 ]
Corporate America, the Chamber of Commerce, many of their allies want to fight this in the courtroom. The Chamber of Commerce told us today that the FTC's rulemaking is unlawful, and they told me today it's already contemplating legal action against it. What is our best understanding of why what you're doing today is legal and within your authority? So the FTC Act that Congress passed clearly gives the FTC the authority to issue rules to carry out its obligations. The FTC Act also prohibits what are known as unfair methods of competition. The agency has determined that these non-competes are unfair methods of competition, and so we have the ability to issue a rule to outlaw them. [ 03:14 ]
As chair of the Federal Trade Commission, one of your goals is obviously more—to see more competition in America. It's fair to say that if workers were given more freedom of movement, that you might also see more businesses sprout up. Absolutely. A lot of the comments that we got were from workers that actually wanted to go start their own competing business. We heard from people in the AVL business that saw an opportunity in the market, wanted to go start a rival firm, but weren't able to do so because they were locked in with a non-compete. [ 03:47 ]
And there's actually, correct me if I'm wrong, there's attorneys and bankers who make a decent income who are also affected by non-compete agreements, right? That's right. I mean, we got comments from across the income level, people making near minimum wage, but also people making tens of thousands of dollars or even hundreds of thousands of dollars, sharing stories about how non-competes had been devastating for their lives. We heard from doctors in rural America who shared how non-competes really limit their ability to continue providing care for their patients if they ever look to change employers. So this is having real-world effects, harming Americans and harming their communities. [ 04:24 ]
As you were talking, I was thinking of corporate M&A attorneys and big bankers at firms who work on mergers. And I would just want to make a point to them that Lina Khan's got your back, so you'll have more freedom of movement as a result of this non-compete ban. Thanks for watching. Don't forget to like and subscribe to see more videos like this one. And if you ever have any ideas for what More Perfect Union should cover next, please drop them in the comments. Thanks. [ 04:48 ]
Headline Sort
The video explained the battle over noncompete agreements. A similar legal fight was happening with overtime pay. With a partner or small group, read the headlines below. They tell the stories of these two rules. Can you sort them into two groups (Overtime Rule and Noncompete Ban) and then put the headlines for each story in the correct chronological order?
- A. "FTC Issues Sweeping Ban on Noncompete Clauses to Boost Worker Freedom"
- B. "Federal Court Strikes Down DOL Overtime Rule Nationwide"
- C. "Nationwide Injunction: Court Freezes FTC's Ban on Noncompetes"
- D. "Department of Labor Announces Major Overtime Pay Expansion for Millions"
- E. "Business Groups File Lawsuit, Arguing FTC Lacks Authority for Ban"
- F. "Legal Challenge Launched Against New Overtime Protections"
Teacher's Note
Correct Order:
Overtime Rule Story: D → F → B
Noncompete Ban Story: A → E → C
Explainer Pairs
Now, let's dive into the details of what happened with these two policies. Your teacher will divide you into pairs (Student A and Student B). Each of you will read a different short text and become an "expert" on that topic. After you read, you will explain what happened with your rule to your partner in your own words.
Student A: The Overtime Rule
Your topic is the overtime rule. Read the text below to understand what was proposed and what happened next.
In 2024, the U.S. Department of Labor (DOL) announced a new rule to make millions more workers eligible for overtime pay—the extra money earned for work beyond 40 hours a week. The rule's main goal was to raise the salary threshold. Workers earning less than this new, higher salary would be automatically classified as "non-exempt," meaning they must receive overtime pay.
The first part of the rule took effect in July 2024. However, business groups immediately argued that the changes were too costly and that the DOL had overstepped its authority. They filed lawsuits to stop it. In a major decision on November 15, 2024, a federal judge agreed with the business groups. The court vacated the entire rule nationwide. This decision canceled the new salary levels, and the threshold for overtime pay reverted to the much lower 2019 standard. The government has appealed the decision, but for now, the 2024 rule is not in effect.
Student B: The Noncompete Ban
Your topic is the noncompete agreement ban, which you saw in the video. Read the text below for more details on what happened after the announcement.
In April 2024, the U.S. Federal Trade Commission (FTC) announced a groundbreaking rule to ban most noncompete agreements nationwide. A noncompete is a contract clause that stops an employee from working for a competitor for a period of time after leaving a job. The FTC claimed these clauses suppress wages and limit career opportunities.
The rule would have made existing noncompetes unenforceable for most workers. Business organizations strongly opposed the ban, arguing that noncompetes are vital for protecting trade secrets and investments in training. They quickly challenged the rule in court. In August 2024, a federal court in Texas issued a nationwide injunction—a court order that blocked the rule from taking effect. The court questioned the FTC's legal authority to issue such a broad ban. As a result, the FTC's noncompete ban is currently on hold and cannot be enforced while the legal battles continue.
Vocabulary & Grammar
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