Through the introduction of the FTC’s final rule, the FTC aims to enhance worker mobility, foster innovation, and promote fair competition in the marketplace. For most businesses affected by the rule, this would almost certainly necessitate a review of internal procedures and employment contracts.
What changes can we expect to the labor market?
Increased Labor Mobility – The ban on non-compete clauses means employees can now switch jobs with less fear of legal repercussions.
Enhanced Competition – By removing barriers that prevent employees from moving to competitors, employee poaching could increase substantially.
Wage Adjustments – To attract and retain talent, the market could see the offering of more competitive salaries and benefits.
What changes do you need to make to comply?
Review Service Contracts – Affected businesses must review and revise existing employment contracts and independent contractor agreements for compliance with the rule.
Update Internal Policies – Internal policies related to employment and separation must be updated to ensure compliance with the new rule.
Strengthen Other Protective Measures – Without non-compete clauses, businesses need to consider other measures that may protect their interests such as NDAs. Have you considered how to apply such measures to both comply & be enforceable?
The FTC’s rule banning non-compete clauses marks a significant shift in employment law that will impact businesses across the country. Therefore affected businesses must be proactive and adapt their internal regulations and employment contracts to comply with this new legal landscape.
Please reach out to us if you have any questions or would like to speak with us about the FTC’s Final Rule.
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