The Federal Trade Commission (FTC) has made a recent announcement of a final rule banning noncompete agreements nationwide.
Noncompete clauses have long been criticized for stifling wage growth, suppressing innovation, and hindering economic dynamism. FTC Chair Lina M. Khan suggests that they impede the creation of over 8,500 startups annually and curtail the ability of individuals to pursue new career opportunities. However, there are many dissenters of this rule as well, which will assuredly result in legal challenges to its enforcement.
Regardless of where you stand on the issue, the ripple effects of this rule are profound. The FTC projects a 2.7% yearly increase in new business formation, translating to more than 8,500 additional startups per year. Moreover, it anticipates higher wages for workers, with the average worker expected to earn an additional $524 annually. The rule is also poised to reduce healthcare costs by up to $194 billion over the next decade and drive innovation, potentially yielding thousands of new patents each year.
While the benefits for workers and innovation might be arguable, it’s important to acknowledge the implications for employers as well.
The FTC’s ban on noncompetes potentially heralds a new era. Whether this is perceived as good or bad, will come down to the eye of the beholder.
If you have questions about your business contracts or noncompete related issues feel free to contact partner John M. Frazier, Jr. or a member of our team for assistance.
About the Author
John M. Frazier, Jr. is a partner at Widerman Malek, PL, specializing in litigation across state and federal courts. He provides strategic guidance to businesses on contractual matters and complex legal challenges. He has a track record of success in advocating for his clients’ interests, whether in high-stakes trials or complex legal negotiations. John’s practice encompasses various areas of litigation, including business disputes, contract law, real estate litigation, and employment matters. He frequently shares insight on various aspects of the law through written articles and speaking engagements within the business community.
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