04/17/2024

What Could Happen if the Non-compete Ban Goes Into Effect

This is a contract an employee signs prohibiting them from going to a competitor

HR Question: Our company uses a non-compete agreement with some of our employees, but I’ve heard those may be banned as soon as April. What does the non-compete ban mean for us?

HR Answer: This is a question about which many employers are wondering. The concern comes from the Federal Trade Commission’s (FTC) 2023 proposed rule to ban non-compete agreements, coming into effect as early as April 2024.

What is a non-compete agreement?

A non-compete agreement is a contract an employee signs, usually as a term of employment, that prohibits them from going to a competitor or starting a competing business when they leave the organization. This agreement usually is in effect for a set period – anywhere from one year and up to two years for the most stringent. The agreements often provide stipulations not allowing employees to work for a similar company, industry, and within a region, for that time after leaving the company. While non-compete agreements can be given to all employees, they are most often used for leadership, sales and client management, and those in product innovation and research.

Please select this link to read the complete article from Clark Schaefer Strategic HR.