On Tuesday, the Federal Trade Commission (FTC) voted 3-to-2 on the new rule to ban noncompete agreements for workers across the United States. Noncompete agreements prevent employees from leaving their place of work and going to other jobs within their industry. This new rule is designed to promote industry competition by “protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.”
The rule will go into effect 120 days after its publication in the Federal Register. It will prohibit employers from enforcing existing non-compete agreements with most workers and prevent them from creating new ones. However, the current ruling allows existing non-compete agreements with senior executives to remain enforceable.
The FTC estimates 30 million people nationwide are affected by non-compete restrictions. This ruling could potentially give millions of workers the ability to seek higher-paying opportunities within their industries. Business groups have expressed concerns about the FTC’s authority to enact this rule and the potential impact on protecting trade secrets.
North Carolina previously allowed non-compete agreements. Under the new FTC rule, existing non-compete agreements for most North Carolina employees will no longer be enforceable after the effective date. Most North Carolina workers will have more freedom to pursue new job opportunities without restrictions from non-compete agreements.
Here at Lord & Lindley, we can help you navigate your way through understanding this new ruling and the impact it will likely have on related provisions, such as non-solicitation clauses. If you have any questions regarding a noncompete agreement, please call us at (704) 405-1010 to learn how we might assist you. For more information regarding our firm, attorneys, and practice areas, please visit our website at www.lordlindley.com.