By Emma Roth
The Federal Trade Commission has voted to ban noncompete agreements nationwide, saying that they are an “unfair method of competition.”
Noncompete agreements — which attempt to prevent employees from working for or starting competing businesses — are especially prevalent in the world of tech, where we’ve seen companies like Amazon enforce and then retract a noncompete agreement for warehouse workers. Acer even sued its former CEO for allegedly breaching a noncompete policy by becoming a consultant for Lenovo.
The change will force companies to reverse existing noncompete agreements and notify employees about the change. Existing noncompete agreements for senior executives can stay in place, but companies can’t enter or enforce new agreements. (The FTC defines senior executives as workers in “policy-making” decisions who earn more than $151,164 annually.)
The FTC found that there are several alternatives to noncompete agreements, including trade secret laws and non-disclosure agreements. “Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism,” FTC Chair Lina Khan says in a statement.
The FTC first proposed banning noncompete agreements in January 2023 and estimates that around 30 million workers are currently locked into one. The agency says the ban will lead to the creation of over 8,500 businesses each year while also lowering healthcare costs and raising compensation for workers. The new rule will go into effect 120 days after it’s published in the Federal Register.
Disclaimer
The information contained in South Florida Reporter is for general information purposes only.
The South Florida Reporter assumes no responsibility for errors or omissions in the contents of the Service.
In no event shall the South Florida Reporter be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other tort, arising out of or in connection with the use of the Service or the contents of the Service. The Company reserves the right to make additions, deletions, or modifications to the contents of the Service at any time without prior notice.
The Company does not warrant that the Service is free of viruses or other harmful components
This article originally appeared here and was republished with permission.
