Federal Trade Commission Chair Lina Khan Bans Noncompetes, Impacting Hollywood Employment Landscape
Federal Trade Commission chair Lina Khan has made a groundbreaking decision that will have a significant impact on the employment landscape in Hollywood. The FTC has voted to ban noncompete clauses, which typically restrict workers from moving to competitors or starting a new business in the same field after leaving a company. This move is expected to improve working conditions and potentially raise pay for workers in the industry.
The ban, which was passed by a 3-to-2 vote, is set to become law in approximately four months. Companies will be required to notify employees who are bound by noncompete clauses that they cannot enforce those terms. While clauses affecting senior executives can remain in effect, new noncompetes will be prohibited.
FTC chair Lina Khan stated that the ban will give Americans the freedom to pursue new job opportunities, start businesses, and bring new ideas to the market. However, the decision has already faced legal challenges, with a tax services and software provider suing to block the ban, citing concerns about protecting intellectual property and retaining top talent.
The ban on noncompetes is expected to lead to an increase in pay for workers, as they will be able to field competing offers from rival companies. SAG-AFTRA has supported the ban, stating that noncompetes have been used to suppress wages in Hollywood and limit job opportunities for lower-paid employees.
While the ban may not have a significant impact on the entertainment industry, as it has long operated without post-employment noncompetes, it could stimulate competition among companies for talented employees. The U.S. Chamber of Commerce has announced plans to sue over the ban, arguing that it will undermine American businesses’ competitiveness.
Companies may seek alternatives to noncompetes, such as fixed-term employment agreements or non-solicitation clauses, to protect their interests. The ban may also raise questions about terms in contracts that require talent to return for follow-up projects, with some industry groups arguing that certain provisions should be exempt from the new rule.
Overall, the ban on noncompetes is a significant development that could have far-reaching implications for the employment landscape in Hollywood and beyond. It remains to be seen how companies and workers will adapt to this new regulatory environment.