Efficient and Effective Legal Representation

Are non-compete agreements soon to be a thing of the past?

On Behalf of | May 11, 2023 | Employment Law |

Many businesses use non-compete agreements to prevent employees from taking important information to competitors when their time at the company is over. Unfortunately, these agreements can also significantly limit employees’ opportunities.

Because of the way that these agreements can impact employees’ careers, many states have looked to tighten or outright ban the use of non-compete agreements.  On the national scale, the Federal Trade Commission (FTC) proposed a ban of these agreements early this year. What should workers know about the movement to limit or ban these agreements?

About the proposed FTC ban

In the first week of 2023, the Federal Trade Commission proposed a ban on the use of non-compete agreements. According to the FTC, this rule has the potential to increase earnings by billions of dollars annually.

Many businesses use non-compete agreements to limit former employees. In fact, around 3 in 10 private sector companies use these contractual restrictions. Many industry groups have pushed back against the proposed ban as a result, and the Chamber of Commerce threatened to take legal action against the FTC after the proposal was announced.

However, many workers have applauded the proposal for its potential to broaden job opportunities and improve earnings for employees. Non-compete agreements restrict around one in five workers, impacting millions of careers nationwide. Because of its potential to support those workers, advocacy groups and unions have spoken in support of the proposed ban.

What comes next for the proposed ban?

During the public comment period, the FTC received more than 26,000 comments, and responses from a variety of organizations. Because of the significant response received during the public comment period, it may take the Federal Trade Commission some time to review those comments.

As of April 20, 2023, the FTC has not announced a timeline for reviewing that feedback or for adjusting the proposal based on the feedback that the agency has received.

What should employees consider if they have signed a non-compete agreement?

While a ban on non-compete agreements could be good news for people hoping to take the next step in their career, those workers can take steps today to protect their future. Seeking guidance from an experienced attorney can help them navigate their employment law concerns and understand the impact that changing regulations have on their rights and their options.

What should employees consider if they are asked to sign a non-compete agreement?

Generally, employees are in a better negotiations position when coming into a job with a proposed non-compete agreement because of the movement against such restrictive covenants. Using experienced legal counsel such as Cross Law Firm whose attorneys regularly review, negotiate, and if needed, litigated non-compete agreements, can be am important part of the hiring process.