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What is happening with noncompete agreements?

On Behalf of | May 6, 2024 | Employment Law

Noncompete agreements have been the subject of much debate and a whole lot of official scrutiny in the United States for several years now. Critics argue that noncompete agreements stifle employee mobility, hurt economic growth and restrict innovation. 

Several states had already taken steps to restrict the use of noncompete agreements, particularly when they concerned low-level, low-wage employees with no specialized knowledge of a company’s proprietary information. 

On April 23, the Federal Trade Commission (FTC) issued a nationwide rule that bans noncompete clauses in most employment contracts. Even existing noncompetes that were already in place will shortly expire under the new rule, with an exception for those involving senior executives.

What does this mean for employees?

Roughly 30 million workers are likely to be affected by this change, representing roughly 20% of workers in this country. However, the issue may not be fully settled. 

The U.S. Chamber of Commerce, representing the interests of businesses who say that they need noncompetes to keep their trade secrets, has already vowed to sue the FTC over the ban. The group also says that noncompetes actually help employees because they give employers more reason to invest in their employees’ futures through training and development.

Whatever your industry, it helps to stay abreast of the changes in employment law. Even if you’re not subject to a noncompete agreement that’s unfair, you could be subject to other contracts, restrictive covenants, garden leave clauses and confidentiality clauses now and in the future. When you’re unsure of your rights as an employee, legal guidance can help.