Noncompete Clauses were once considered essential in employee contracts…
Now they might be banned completely.
This move can boost competition in the workforce, allowing employees to get more competitive with their wages.
However, the ban faces intense opposition and challenges.
Here’s the full story.
Federal Trade Commission Bans Noncompete Clauses
On April 23, the FTC voted to ban noncompete clauses in employee contracts, 3-to-2.
These agreements prohibit employees from working for their company’s competitors…
When they’re switching jobs.
Beyond working for competitors…
The clauses also forbid employees from starting companies that might compete with the company they used to work for.
The new ban by the FTC would allow workers to move from job to job, without fear of a lawsuit. Not to mention, it lets workers become more competitive regarding their pay.
Traditionally, noncompete clauses have been used for upper-level executives to protect company secrets…
But have since trickled down to mid and entry-level employees.
Essentially, the FTC’s main argument against noncompete clauses is that…
IT TRAPS WORKERS IN JOBS THEY WANT TO LEAVE
A ban on noncompetes also stifles worker’s economic prosperity…
Especially considering that 40% of workers have been subject to one. And the truth is, most workers would rather leave the job they hate than stay stuck in it.
With all of these benefits, it seems the bans would already be a done deal…
Yet the decision is already being challenged.
Chamber Of Commerce Challenges Ban
The same day that the ban was voted on, the Chamber of Commerce filed a lawsuit against the FTC for their decision.
Their main argument?
The FTC doesn’t have the authority to rule on noncompete clauses… and even if they did, the ban would not be lawful.
Regarding the challenge, the FTC responded…
“OUR LEGAL AUTHORITY IS CRYSTAL CLEAR…ADDRESSING NONCOMPETES THAT CURTAIL AMERICANS’ ECONOMIC FREEDOM IS AT THE VERY HEART OF OUR MANDATE, AND WE LOOK FORWARD TO WINNING IN COURT.”
Not to mention, the FTC’s authority didn’t just come from nowhere…
Congress empowered the FTC to define unfair competition and prevent it.
Which way the lawsuit will go is still up in the air but one thing is for certain…
The outcome has the potential to change the future of employee contracts for everyone.
Be Great,
GCTV Staff
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