Noncompete agreements are legally binding documents that employers sometimes use with their employees. If an employee signs such a document, they’re saying that they won’t leave their position to take the same job with the competition. In some cases, they’re also agreeing not to start a business that could be viewed as competition to their prior employer. These agreements usually have a certain scope, such as lasting for 12 months.
However, the Federal Trade Commission (FTC) is considering a ban on noncompete agreements. This would make it so that employers are no longer able to use them and would likely mean that they wouldn’t be enforced in court moving forward. So, even if an employer didn’t know that the law had changed and had an employee sign such a document, if they tried to exercise it when the employee got a new job, the employer would find out that it was no longer legally binding.
Why is this being done?
The main issue with noncompete agreements that critics cite is that people may feel that they are trapped in their jobs. If they only have a specific set of skills that they’ve learned on the job, but they’re not allowed to work for the competition, then they can’t seek higher wages. The business doesn’t have to try to retain their loyalty by giving the employee a raise or a promotion. The employee knows they cannot leave even if they’re unhappy.
In other words, if noncompete agreements are eliminated, employees will be able to move around more freely in the workforce. This could theoretically lead to an increase in employee wages overall – or, at least, that is what proponents of the ban claim.
It’s very important to keep an eye on how the laws may be changing, and this is one example. Business owners need to know about all their legal options.