Staying up-to-date with the legality of non-compete clauses

The FTC has proposed a rule to ban non-compete clauses. Non-compete clauses have allowed companies to reduce their competition by preventing employees from working at similar companies after leaving their employment. Depending on the wording of the clause, it may prevent independent contractors or employees from even working in the same field within a specified amount of time after leaving the company or project. It may prevent former employers from working within a certain geographic area for a period of time after their employment terminates. It may also prevent former contractors or employees from starting their own company in the same field. Other non-compete clauses require employees to repay the company for training expenses if they terminate within a specified amount of time.

The FTC argues that such agreements lower wages for all workers in the particular field, those who signed the clauses along with those who did not. It considers such clauses an unfair method of competition. However, the FTC is asking for the public’s opinion on its proposal.

Details of the New Proposed Rule to Ban Non-Compete Clauses

The Federal Trade Commission (FTC) has proposed banning future non-compete clauses and rescinding existing non-compete clauses based on the following statistics:

  • One in five American workers have signed non-compete clauses (approximately 30 million people)
  • Banning non-compete clauses would end the restriction of better employment opportunities, resulting in an increase in American workers’ earnings between $250 billion and $296 billion per year

As an employer, do you need legal help with employment contracts?

By addressing legal concerns or questions early on, employers can often avoid disputes and expensive lawsuits. At the outset of a potential workplace issue, you are wise to seek legal advice. Our firm can assist you with employment contracts and legal clauses that help you protect your bottom line. If you have employment law questions, arrange an appointment. Discuss your concerns with an attorney at Stephen D. Hans & Associates, P.C. Call (718) 275-6500.

FTC Proposed Rule to Ban Non-Compete Clauses