The Federal Trade Commission (FTC) recently voted to ban non-compete agreements that bar workers from working for their employers' competition or even starting a new business after they quit.
Here’s Five Fast Facts About The FTC’s Non-Compete Ban:
- 📄 Full Stop - The new rule bans companies from starting any new non-compete clauses with current or former employees. So if you’re getting sued for violating one as we speak, they have to drop it. The FTC estimates that roughly 30 million workers are in a non-compete agreement.
- 👔 Executives Only - Companies can enforce existing non-competes only for senior executives. The FTC defines them as an employee in a policy-making position earning at least $151,164 a year. Employers have to tell current or former employees that their non-competes won’t be enforced.
- 📃Majority Rules - The new rule was proposed in January. A 90-day public comment period followed, with more than 25,000 comments in favor of a rule change. The rule was passed 3-2.
- 📈 Mo’ Business - According to the FTC, the new rule will result in a 2.7% increase in new businesses started every year and the average worker’s salary would increase by $524 a year.
- 🙅♂️ Buzzkiller - The U.S. Chamber of Commerce isn’t happy. They’ve promised to sue the FTC to stop the rule. A spokesperson said the rule will prevent businesses’ abilities to be competitive.
🔥Bottom line: Score one for the worker, at least temporarily. Non-compete clauses have long been a thorn in the side of anyone who has signed them. The opposition from the Chamber of Commerce is strange, because you’d think they’d want more businesses to represent.
What do you think of this rule?
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