The US Federal Trade Commission’s proposed non-compete ban would apply to deals where workers are forced to pay back their companies for training, the agency’s chair Lina Khan said Friday.
(Bloomberg) — The US Federal Trade Commission’s proposed non-compete ban would apply to deals where workers are forced to pay back their companies for training, the agency’s chair Lina Khan said Friday.
The antitrust and consumer protection agency has proposed a rule to ban non-competes nationwide – clauses that prohibit workers from switching jobs within an industry – and is accepting public comments through next week. The FTC’s proposal covers both non-competes and provisions that have the same effect, Khan said in remarks at a Chicago conference.
Training repayments agreements are clawback deals that force workers to pay back their employers for job training, and can require as much as $75,000 for a premature departure. Once the province of high-paying industries like finance, job training programs have since spread to other professions such as nursing, trucking and pet grooming. Workers from PetSmart, owned by private equity firm BC Partners LLP, and by securities broker Edward D. Jones & Co., are among those who have challenged the legality of such accords.
Training repayments with “a clear disproportion between the amount that the employer is actually investing and what the worker is on the hook for” effectively function as non-compete clauses, Khan said, noting the agency has seen instances where employers spend $1,000, but require $10,000 payments if workers leave too soon. “Under our proposed rule that would also be covered.”
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