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  • Danielle Brent-Bownes

Freedom at Work: FTC Bans Non-Compete Agreements! Your Career Just Got a Whole Lot Wilder!

Hey there, job hoppers and career explorers lol just kidding. Big news on the horizon: the Federal Trade Commission (FTC) just dropped a bombshell by saying "buh-bye" to those pesky non-compete agreements. You know, those clauses that make you feel like you're stuck in career quicksand? Well, get ready to do a victory dance because the era of being shackled to your job just got a whole lot shorter!


Understanding Non-Compete Agreements:


Non-compete agreements, commonly included in employment contracts, are contractual clauses that restrict employees from engaging in competitive activities with their current employer after leaving the company. These agreements are often justified as necessary measures to protect a company's intellectual property, trade secrets, or client base. However, critics argue that non-competes can excessively limit job mobility, stifle wage growth, and inhibit competition within labor markets.


Implications of the Ban:


The FTC's ban on non-compete agreements represents a significant departure from previous practices and has far-reaching implications for both employers and employees. By prohibiting the enforcement of non-competes, except in cases where necessary to protect legitimate business interests such as trade secrets, the FTC aims to promote greater freedom and mobility for workers.


For employees, the ban offers newfound flexibility in pursuing career opportunities without the fear of legal repercussions or restrictions on their ability to switch jobs within their field. This increased mobility may lead to greater job satisfaction, improved bargaining power, and potentially higher wages as workers are no longer tethered to restrictive contractual obligations.


From an employer standpoint, the ban necessitates a reassessment of hiring practices and the use of non-compete agreements as a tool for retaining talent or safeguarding proprietary information. Employers may need to explore alternative strategies for protecting sensitive business assets while remaining compliant with the new regulations. Some options could be:


  • Trade Secrets- valuable and confidential information that provides a competitive advantage to a company, such as formulas, processes, designs, or customer lists, and are kept confidential to maintain their economic value and prevent competitors from gaining access to them.

  • Non Disclosure Agreements- legal contract between parties, typically an employer and an employee or between businesses, designed to protect confidential information shared during the course of a professional relationship.

  • Improve wages and working conditions- statistics show that an employer that is paid well and receive adequate and flexible working conditions are more loyal to their employer.


Under the new rule, existing noncompetes will no long be enforceable after the rules effective date. Unless you are a senior executive. Maybe you're thinking that could be me but senior executives represent less that 0.75% of workers. More specifically, senior executives are workers who are earning more than $151, 164 annually and who are in policy-making positions.


Is there anything else I need to know?


Yes, the new ban states that employers will have to provide notice to workers bound to an existing noncompete that the noncompete agreement will not be enforced against them in the future.


When will the new rule go into effect?


We don't know the date of publication but the new rule will become effective 120 days after Federal Register Publication.


How will this rule be monitored?


Once the rule become effective, people can report violations of the rule to the Bureau of Competition by emailing noncompete@ftc.gov


If you have questions or concerns about the new rule please give us a call at 336-560-3926.




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