Have you ever signed a noncompete agreement? Did you have to sign one before starting at your company? Are you worried about trying to leave your job after signing a noncompete? If the answer to any of those questions is yes, then you will be interested to hear that as of January 5, 2023, the Federal Trade Commission (FTC) has proposed banning non-compete clauses in employment agreements. Their reasoning is that these agreements harm competition, suppress wages for workers, reduce labor mobility, and don’t encourage innovation.
Generally speaking, the proposed rule would prevent both employers and independent contractors from maintaining or entering noncompete agreements with their employees, including a limited exception between a seller and buyer of a business. Any existing noncompete agreements must be nullified within six months of the final rule. However, the definition of a noncompete clause does not include nondisclosure (NDA) or non-solicitation (NSA) agreements, and those will be unaffected by this ruling.
Once the proposed rule is published in the Federal Register, the FTC encourages the public to make comments within the next 60 days to determine the status of the final rule. If this proposed ruling does pass it could increase employee wages by about $300 billion per year and expand career opportunities. However, this ruling will likely take some time before becoming instituted as it is expected that there will be pushback from companies and employers that often use noncompete agreements.
The best way to be prepared for any new rulings or law changes is to stay updated on current events and do your research. To learn more about this new proposition by the FTC, visit: https://www.ftc.gov/system/files/ftc_gov/pdf/p201000noncompetenprm.pdf
DII is your partner in business preparation and operations. Our team of experts can work with you to understand the best plan of action for your workplace during any regulation changes to come. Please contact your DII representative for more information. #FTC #noncompete #changes
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