Non-Compete Clauses
Currently, the Biden administration is attempting to rein in non-compete clauses in employment contracts. These clauses prevent you from easily moving from job to job and may even limit your ability to leave a job for a better one since you may have to wait a period of time before you can start or may even have to leave the area. Employees often don't know they have to sign one unit they have already quit their old job or may not notice it in the flurry of paperwork they have to sign. This is the FTC's description:
About one in five American workers—approximately 30 million people—are bound by a non-compete clause and are thus restricted from pursuing better employment opportunities. A non-compete clause is a contractual term between an employer and a worker that blocks the worker from working for a competing employer, or starting a competing business, typically within a certain geographic area and period of time after the worker’s employment ends. Because non-compete clauses prevent workers from leaving jobs and decrease competition for workers, they lower wages for both workers who are subject to them as well as workers who are not. Non-compete clauses also prevent new businesses from forming, stifling entrepreneurship, and prevent novel innovation which would otherwise occur when workers are able to broadly share their ideas. The Federal Trade Commission proposes preventing employers from entering into non-compete clauses with workers and requiring employers to rescind existing non-compete clauses. The Commission estimates that the proposed rule would increase American workers’ earnings between $250 billion and $296 billion per year. The Commission is asking for the public’s opinion on its proposal to declare that non-compete clauses are an unfair method of competition, and on the possible alternatives to this rule that the Commission has proposed.
Here is a typical description of such as agreement you might see when you take a new job:
Noncompete Agreement : During the Restriction Period, the Employee agrees to not engage in competitive activities, including employment with competitors, acting as an officer or director, or selling services similar to those of the Company within the Restricted Territory. The Restriction period will last for one (1) year upon Employee’s termination or resignation under the doctrine of at-will employment laws of the State. The Restricted Territory shall include a radius of two hundred and fifty (250) miles around the principal office. Employee’s signature confirms an acknowledgment of the Noncompete Agreement herein.
What do you think? Are you covered by a non-compete agreement? If you run a business, do you require your employees to sign one? Join us for a discussion about freedom to work, trade secrets, client loyalty, entrepreneurship, training investment, who owns your job experience, the advantage of learning from someone else's mistakes, and maybe better ways of handling all this.
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Time: Jun 25, 2023 04:30 PM Eastern Time (US and Canada)
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