Federal Trade Commission Seeks to Ban Noncompete Clauses

The Run-Down: Earlier this month, the FTC proposed a rule to ban noncompete clauses

  1. The FTC argues around 30 million people in the U.S. are restricted by noncompete clauses, contract terms that restrict employers from working for current employers’ competitors. 
  2. The FTC believes the proposed rule would increase workers’ earnings between $250 billion and $296 billion per year.

Why You Should Care:

While many workers are rejoicing over this news, some employers have already begun protesting the possibility. Proponents point to the potential lost earnings many Americans face when they agree to these contract terms in order to secure employment. They highlight how critical is it that the average employee may lack the knowledge to fully understand what they’re agreeing to within an employment contract. Similarly, they stress that employees who need to make money (you know, to live) feel backed into a corner and forced to accept these restrictive terms.

On the flip side, business moguls, believe this is taking great security and protection away from businesses. Employers argue noncompete clauses safeguard organizations’ trade secrets and proprietary information. They also stress this saves businesses from investing time and money into talent that will then go on to “better” deals.

Wherever you land on this – it’s clear one thing is true: the market is changing. No matter the industry, the company, or the individuals that make up the business, we’re seeing transformation across the board.

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