Non-compete Agreements: Big Changes are on the Horizon

The Feds are beginning to wade into the morass that is non-competition agreements. And if the Feds keep at it, you can bet that big changes will be coming.

By way of background, non-competes were traditionally governed and regulated by state laws. This resulted in a lot of confusion, inconsistent rulings and headaches. By the same token, though, since non-competes were traditionally used in very select circumstances, these problems were more of a nuisance than anything. But, over the last decade or two, the use of non-competes has widely expanded and, with that expansion, has come misuse or abuse. So now the Feds are looking into it.

Earlier this month, the Federal Trade Commission held a day-long “workshop” to examine the situation. No less than 23 speakers presented. As the FTC noted, almost 20% of US workers are now governed by non-competes and the consumer is being harmed as result. Since non-competes are being used with even the lowest level of worker, wages are being suppressed and job mobility is decreasing. The consumer is no longer necessarily free to consume the services desired. An example of this would be the healthcare provider who changed jobs and could no longer treat the patients from the previous employer.

It remains to be seen whether or not the Feds will push further into this arena, but it mertis watching. If the FTC does issue a Commission Rule, it will undoubtedly affect every business that uses non-competes.

To watch the workshop, click here (Part 1) and click here (Part 2).

To read the transcript of the workshop, click here.

To view the PowerPoint presentation slides, click here.