The Federal Trade Commission is discussing a significant rule change that would put more power into the hands of workers across the U.S. A recent rule change proposal would ban non-compete clauses for all employees. Not only would this prevent future employment agreements from including these clauses but the proposed change would also nullify any previously-standing non-compete clauses.
This is no small change as it would shift the landscape in certain industries that often use non-compete clauses to suppress wages and keep employee retention artificially high. So, what would this mean for employees?
Creating an Employee “Free Agency”
Eliminating non-compete clauses allows employees to move freely from job to job without having to worry about whether or not their new employer is considered “competition” to their former employer. Using a sports analogy, this creates a “free agency” for employees to choose where they work and even provides more power at the negotiating table. Free agency is what allowed Tom Brady to come to Tampa Bay and allowed Steven Stamkos to negotiate a massive contract to stay in Tampa Bay years ago.
Free agency does not mean there will be a free-for-all on the job market. Many people enjoy their current job. The elimination of non-compete clauses would also provide more negotiating power for increased wages and benefits at your current place of employment.
Better Wages and Benefits
In some cases, employees would not have to negotiate better wages and/or benefits if these clauses are nullified. Employers will want to get ahead of a potential mass exodus of workers by offering pay raises and additional benefits.
The FTC claims this rule change would create nearly $300 billion in additional wages per year for employees and expand career opportunities for more than 30 million Americans. These are life-changing numbers for workers.
What This Means Today
Right now, this remains just a proposal. This comes a few months after President Joe Biden issued an executive order pressuring the FTC to make this exact change in order to promote competition. Nothing has changed in relation to current non-compete clauses and companies can still ask you to sign one as part of a new employment agreement today. It is, however, likely that some employers are anticipating this change and will consider alternatives in the meantime.
These things take time, so if you still have a non-compete clause and need help navigating the legality of a claim made by your employer, contact Feldman Legal Group. We have handled several cases relating to non-compete clauses and the illegal ways companies attempt to enforce them here in Florida.
If an employer is seeking to enforce a non-compete covenant or agreement against you, get some legal advice. We can review the agreements and provide legal advice on enforcement.