The Federal Trade Commission has recently approved a noncompete ban that could have a significant impact on the health care industry. This rule, which passed by a three to two vote, aims to eliminate noncompete agreements across all sectors of the economy. While this change is expected to lead to more new businesses and higher earnings for workers, it may not take effect for years due to legal challenges.
Currently, almost one in five Americans are subject to noncompete agreements, most of which could disappear in late August if the final rule is implemented. However, it is likely that the noncompete ban will face legal challenges and may not be fully enforced until after years of litigation.
One important aspect of the noncompete ban is that it does not apply to nonprofit companies. The FTC only has jurisdiction over for-profit companies, so the ban will not affect most hospitals, which are nonprofit, and some of the largest health insurers in the country. This means that the ban may not have as broad of an impact on the health care industry as originally thought.