Jake Bailey’s Post

The FTC has banned noncompetes! This is long overdue in my opinion. I wish this was done years ago!! The shackles of noncompetes really tie an employees hands and fosters an unhealthy employer advantage in the relationship. Employees should be allowed to work for who they want to when they want. I recognize the concern employers may have over sensitive data such as pricing models, and intellectual property and the need protect them. However those items can all be handled by a nondisclosure agreement. Noncompetes really upset the balance of the employee / employer dynamics giving an unfair advantage to the employer. Often times people are starting a brand new job and are asked to sign noncompetes as a contingency of being employed. A large portion of these people are trying to raise a family and must move forward with signing as the bills do not stop stacking up. I am thrilled to see my friends in the workforce become free to move about based on which employer is providing the best complete package! This should reshuffle the deck. Now the best employer will have the best employees.

The FTC voted today to ban noncompete agreements. What do leaders need to know? -The rule goes into effect 120 days after publication in the federal register -Most existing noncompetes will then be invalid and employers will be required to notify any employees with an existing noncompete of this. The FTC provided sample language for this here: https://lnkd.in/gsdWgt_r -"Senior Executives" (defined as $151,164 annually and who are in policy-making positions.) can be held to existing noncompetes but no new ones can be created. -The FTC found that 95% of workers on a noncompete are also on an NDA which provide similar protection to employers. If you are in that 5% or otherwise just haven't designed your NDA to cover the kind of things you wouldn't want employees taking to competitors, now would be the time to fix that. --- As the barriers to transitioning get lower and lower, building a thoughtful remote first culture and providing compelling social proof of that is going to be more important than ever! https://lnkd.in/gzjvHXxb

So if you haven't heard, the FTC recently banned noncompete agreements for all business in the US. This goes into effect 120 days from publishing in the Federal Register which should be May 7th, making this effective September 4th 2024. From that point on, no existing noncompete can be enforced* and no new noncompete agreement can be levied. This does NOT apply to other agreements such as NDA and trade secret type paperwork. Employers will be required to provide notice to workers (other than senior executives) who are bound by an existing noncompete that they will not be enforcing any noncompetes against them. Most non-competes have technically been unenforceable in court anyway, but this can no longer be used as a scare tactic. * There is a clause that existing agreements for a slim number of existing senior level executives (< 0.75% of workers) can continue, but no new ones can be started. https://lnkd.in/g3AA8dtr https://lnkd.in/gu7VYeN9

Things I hate... Non-Compete Agreements. The FTC has announced they plan to ban non-compete agreements, which is great considering approximately 18% of employees are covered by non-competes in the US. Granted, there are specific scenarios regarding prop trading, algorithms and others that it is important to protect. However, for the average employee, this is a breath of fresh air. I'm sure there is a sigh of relief from financial advisors, middle and back office employees, and even from us recruiters. The only caveat was this: "Under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions" https://lnkd.in/gfkkGFx9

Important update regarding noncompete agreements. Personally, I am a huge fan of this. Noncompete agreements impede growth by limiting employee mobility. They can also prevent employees from accepting higher level or better paying roles with other companies. The FTC notes that eliminating noncompete agreements will encourage employers focus on utilizing factors such as merit increases and better benefits to retain top talent rather then preventing them from accepting employment elsewhere. Protecting proprietary information and/or trade secrets is one thing, but a full noncompete is unfair to employees. The use of NDAs is still permitted and can be used to protect an employer's information. Employers can now seek out top talent without the need to work around overly broad noncompete agreements. https://lnkd.in/g-C3FUs5

The FTC has announced a ban on noncompetes, which becomes effective 120 days after publication in the Federal Register. Existing noncompetes for senior executives can remain in force, but employers are prohibited from entering into or enforcing new noncompetes with senior executives. For other employees, employers will have to provide notice to workers bound to an existing noncompete that the noncompete agreement will not be enforced against them in the future. #FTC #faircompetition #employmentlaw #inhousecounsel #ogcnetwork

NON-COMPETES BANNED! A momentus occasion for workers everywhere! Non-competes are used by weak and incompetent companies to exploit workers and hinder growth of individuals, communities and the economy. Instead of being able to retaliate against valuable employees, companies will now be forced to offer better incentives and be better to retain employees. Congratulations to everyone who has been attacked by a former employer having signed a non-compete. https://lnkd.in/gcutREzi

For years many States have frowned on non-compete clauses, courts have reduced geographical restrictions, employers and employees have argued over how long the limitations should apply... 120 days from now none of that will be necessary any longer. And if you are an employer who has a non-compete with a current or former employee, you will likely be required to send them formal notice that they are no longer bound to those terms. The FTC feels like prohibiting these agreements will create jobs and allow new business development.

Non-competes...I waited a few days to react since I have been both an employee subject to a non-compete and an employer applying them as a tool to build teams. Personally, I've never supported their use in non-leadership roles. On net, the ban is likely positive. However, there are some unintended consequences that those cheering loudly may be overlooking. In recent years, as the breadth of non-competes has been narrowed, mostly by State law, in leadership roles, there is commonly a severance agreement that offsets time that one must sit out of either a geography, a profession, or both. If non-competes are eliminated, I wonder if severance agreements will become less common. Since FTC action generally does not apply to not for profit entities, in comments post vote, the FTC seems to be signalling that they will evaluate the validity of not for profit status of a number of healthcare organizations. Will this position drive voluntary compliance throughout the healthcare industry? With legal challenges filed before the ink was dry on the order, this is far from settled. Will definitely be interesting to watch the landscape on this one.

Ban on non-competes is coming per the new ruling by the FCC. The highlights: 1. Any non-compete currently in place will no longer be effective August 1, 2024. 2. Employers with non-compete agreements must notify their employees that they will no longer be enforced after August. 3. Senior level employees who make above $151, 164 AND hold policy-making roles are exempt from the ban. https://lnkd.in/ebxQFtG2