FTC Bans Non-Competes
The Federal Trade Commission (FTC) just announced a final rule banning non-compete clauses for most workers in the U.S. This ruling is a major victory for sales professionals, our mobility, and the opportunity to maximize our earnings.
What were non-compete clauses?
These clauses in employment contracts restricted those of us working in sales (and other professions) from taking a new job or starting a business in a similar field for a certain period after leaving our current position.
Some non-competes last as long as three years, but the most common time restriction is a year. Often exploitative, they limited career choices and kept wages artificially low.
The FTC estimates that 30 million workers, nearly one in five Americans, were subject to a non-compete, forcing them into situations like:
- Staying in a Job They Dislike: Many workers were stuck in unfulfilling roles because finding a new job meant potentially violating a non-compete and facing legal challenges.
- Lower Wages: Limited job mobility due to non-competes weakened workers' bargaining power, keeping wages stagnant.
- Reduced Innovation: The inability to freely move between companies stifled the exchange of ideas and hindered innovation across industries.
What does this mean for us?
- More Freedom: We'll be free to pursue new opportunities without fear of legal repercussions.
- Higher Earning Potential: Our earning power will increase with a broader job market.
- Greater Innovation: The ability to move between companies fosters the exchange of ideas, leading to more innovation across industries.
- More Competition: More competition in the job market benefits everyone, as employers will be motivated to offer better wages and working conditions.
What about existing non-competes?
Most existing non-competes will no longer be enforceable once the rule goes into effect (roughly 120 days from now). Employers must notify workers that these clauses are no longer valid.
The Future of Work
This ruling empowers workers and fosters a more dynamic and competitive job market. It's a win for the American economy and paves the way for a future where hard work and talent are rewarded, regardless of past employment.
