The Federal Trade Commission (FTC) has finalized a broad ban on non- compete clauses in employment contracts throughout the United States. While many consider this to be a potential boon for workers, employers have pushed back, saying that non-compete agreements are essential for their businesses. The FTC is already facing potential litigation on the issue from employers angry about the new rule.
What Are Non-Compete Clauses?
In basic terms, a non-compete clause is a type of agreement (often found as part of a larger employment contract) that prevents an employee from working for a competitor in the same market and industry as their current employer for a certain period of time. This includes both getting a position with a competitor, as well as starting a new business in the same market. Typically, these agreements last for between six months and two years, depending on the exact terms of the contract.
Why Do Employers Use Non-Compete Clauses?
Non-compete clauses are popular for businesses because they make it harder for employees to become scouted by competitors, or for them to become competitors themselves. Without these agreements, employees have a strong incentive to potentially leave their employer if a better offer comes by. When they do this, they can take valuable training, trade secrets, or client lists with them, damaging their former employer in the process.
Why Did the FTC Ban Them?
The FTC has decided to ban the use of non-compete clauses in employment agreements because they have arguably been overused. While initially they were meant to protect against poaching of employees with specific, high-demand talents or experience, they have now been broadly used as a way of keeping employees at all levels from being able to seek better employment. This keeps employees locked into bad jobs and limits their ability to find better work, keeping wages low and preventing employees from taking advantage of their skills and experience.
What Should You Do?
If you have been subjected to a non-compete clause in your employment contract, you should speak to a lawyer with experience handling employment law issues. They can help you negotiate your contract, and deal with any legal disputes that may arise. The sooner you call, the sooner they can get to work for you.
Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 44 years’ experience handling the many aspects of employment law. His new book, “Fired!: Protect Your Rights & FIGHT BACK If You’re Terminated, Laid Off, Downsized, Restructured, Forced to Resign or Quit,” is available in hardback, and contains valuable advice on dealing with employment and labor law issues. To purchase the book, feel free to contact Steven Sack at 917-371-8000 or visit the website at legalstratpub.com. To inquire about a legal matter, please feel free to contact attorney Steven Sack at 917-371-8000 or stevensackatty@hotmail.com.
