Published , by Sam Chandler
Published , by Sam Chandler
Noncompete clauses may become a thing of the past now that the Federal Trade Commission has voted 3-to-2 in favor of a ban. This move would see businesses banned from making employees sign noncompete clauses that prevents them from working for a competitor.
On April 23, 2024, CNBC reported that the Federal Trade Commission (FTC) has voted to ban noncompete clauses, which will affect new contracts as well as existing contracts for employees. The only employees that will still have noncompete clauses will be senior executives who earn more than $151,164 per annum and who make policies.
It’s expected that there will be pushback from industries and business groups. Most of those against the ban state that their position is in a bid to protect company secrets and intellectual property.
According to CNBC, the FTC suggests that businesses find other ways to secure their IP, including non-disclosure agreements instead of relying on a practice that, in the Federal Trade Commission Chair Lina Khan’s eyes, “keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned.”
With more than 26,000 comments on the proposal that was first introduced at the start of 2023, the majority of them in favor of the ban, it’s clear that noncompete clauses are not a favorable means of protecting business secrets. Ironically, the FTC’s recent lawsuit against Microsoft’s acquisition of Activision Blizzard resulted in documents being leaked which revealed an Xbox Series X mid-life refresh.