The End of Non-Compete Clauses?
This week, the Federal Trade Commission (FTC) proposed a sweeping ban on non-compete clauses in employment contracts across the United States.
Non-compete clauses are a common component in many employment agreements. In the simplest terms, a non-compete clause prohibits an employee from leaving their current company and working in the same industry (and geographic area) for some specified period of time. These clauses can make career mobility incredibly difficult for workers seeking better opportunities.
In support of the proposed ban, the FTC points to research indicating that non-competes suppress wage growth, as one of the most reliable ways to secure a raise is by moving to a competitor. The Commission projects that eliminating non-competes could increase national wages by nearly $300 billion annually and expand job opportunities for approximately 30 million American workers.
In practice, litigating non-compete covenants can be grueling. Under Delaware and federal law, courts scrutinize non-competes for "reasonableness" with respect to both duration (e.g., number of years) and geographic scope (e.g., radius of restricted competition).
On a personal level, individual employees rarely have the financial resources to compete with large corporations in protracted litigation, giving employers substantial leverage. If you have a non-compete clause in your employment contract and need to understand your rights, contact Dave Holloway today for an in-depth contract evaluation.