The FTC Bans Non Competes

If you're a business owner who has provided an employment contract or an employee who has signed an employment contract, you might be one of the 30 million people affected by this new ban. In this video, I'm going to explain what this means for business owners and employees alike. Stay to the end, and I'll share with you what you can do to protect yourself.

First, let's discuss what a non-compete is. A non-compete is a contract or a section in a contract that states an employee cannot compete with their employer, whether directly or indirectly. The regulation we're discussing here defines a non-compete as a clause or a term that prohibits, prevents, or penalizes a worker for seeking employment with a different person or operating a business in the United States after ending employment.

Essentially, this means that once someone has worked for a company, they can't leave to work for a competitor or start their own business for a specified period, usually six months to two years, and within a certain geographic area.

This new regulation from the FTC bans all non-competes going forward and most non-competes retroactively. Many employers have these clauses in their contracts, affecting a significant number of people.

From a business owner's perspective, non-competes are often seen as necessary to protect investments in training, trade secrets, and business strategies. However, employees can feel trapped and discouraged from seeking new opportunities.

Take, for example, the case of Haley Page, a wedding designer who faced legal battles due to a non-compete clause she signed when she was 25. Despite becoming famous, she found herself unable to use her own name professionally due to contractual obligations.

The FTC's crackdown on non-competes is aimed at preventing unfair competition practices by employers. Overreliance on non-competes stifles innovation, suppresses competition, and keeps workers stuck in unfavorable situations.

However, the situation is still evolving. The regulation isn't officially in effect yet, and legal challenges are underway. For now, it's essential for both employees and employers to review their contracts and understand their rights and obligations.

Employees should wait for official guidance before making any changes to their employment agreements. Meanwhile, business owners can take proactive steps to protect themselves by reviewing and refining their contracts, particularly focusing on non-disclosure and non-solicitation clauses.

Creating a positive work environment that encourages growth and innovation can also reduce the need for restrictive agreements. Additionally, seeking legal advice to ensure compliance with evolving regulations is crucial for both employees and employers.

In conclusion, while the ban on non-competes marks a significant shift in employment practices, it's essential for individuals and businesses to adapt and navigate these changes responsibly. Stay informed, seek guidance, and take proactive measures to protect your interests in this evolving landscape.