FTC is Banning Non-Compete Clauses

The FTC has recently voted to ban non-compete agreements including non-compete clause. When the ban comes it will require companies to inform workers and employees that they will not enforce non-compete and they will have to delete or get rid of contracts that reflect the said clause. Companies will also have to throw out existing noncompete agreements for most employees, although, in a change from the original proposal, the agreements may remain in effect for senior executives. 

Understanding Noncompete Clauses 

 Noncompete clauses are provisions commonly included in employment contracts and agreements between businesses and their associates. These clauses restrict employees from working for or starting a competing business for a certain period after leaving their current position. 

What Does This Mean For Businesses? 

 Businesses need to review their existing contracts and agreements to identify any noncompete clauses that may now be unenforceable under the new regulations. Updating these contracts to remove such clauses is essential to avoid legal risks and ensure compliance with the FTC's guidelines. 

 This news is not being taken lightly as Business Interest and US Chambers of Commerce is seeking to sue the FTC for this upcoming regulation citing it as unfair regulation of competition and its beyond the FTC’s authority. 

What Should Business Owners Do?

 Business owners should prioritize annual updates to their agreements to ensure alignment with evolving laws and regulations, including compliance with the FTC's ban on noncompete clauses. By regularly reviewing and revising contractual agreements, businesses can mitigate legal risks and avoid unnecessary expenses associated with noncompliance.