The FTC Limits the Use of Non-Compete Contracts, Securing Greater Freedom for Direct Care Workers

Continuing its work to strengthen the direct care workforce, the Biden Administration released a final rule on April 23, largely banning the use of non-compete contracts, including for direct care workers. These contracts—often imposed as a take-it-or-leave-it requirement—prevent employees from working for a competing company during or after their current employment. Historically, they have been used to restrict high-paid, high-ranking employees, like executives. Yet, in recent years, they have proliferated, including in low-wage work, and particularly in home care.  

The Federal Trade Commission’s final rule will help workers in many different fields gain higher wages and opportunities to rise in their careers by ensuring they have the freedom to change jobs and hold multiple jobs simultaneously. This rule is especially important to workers of color and women who have been negatively affected as non-compete clauses became routine in many industries, exacerbating racial and gender wage gaps. In all, millions of workers have been adversely affected by exploitative contracts that affect their wages, mobility, and workplace conditions. 

This is particularly true for direct care work. The key to supporting current direct care workers and attracting more people to the field is job quality. One component of this is ensuring direct care workers can move between employers without having to fear the punitive consequences of a non-compete contract. Even when they are unenforceable, non-compete contracts create real fear among direct care workers that they will be sued for changing jobs or working multiple jobs. It prevents workers from moving to a higher-paying job in the same field or finding a better-fit employer while leaving them more vulnerable to discrimination. 

For all of these reasons, PHI is once again celebrating the work of the Biden Administration, this time in its decision to curb non-compete contracts, including in direct care. We are truly grateful to see PHI’s and other experts’ recommendations incorporated into this rule. And we applaud this move to ensure direct care workers around the nation have the freedom of job mobility.