Arguments About the Noncompete Clause
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As students sign employment agreements, they might be interested in researching arguments for and against the noncompete clause. Here are a few sources for students to explore:
The Federal Trade Commission (FTC) initiated a new rule that U.S. employers can no longer include noncompete clauses:
The 570-page “Final Rule” document
Summary “Fact Sheet” that quantifies benefits of reducing healthcare costs, allowing new businesses, increasing innovation, and increasing worker earnings
CNN interview with FTC Chair Lina Kahn, who claims that the FTC has “clear legal authority” to institute the ban
The FTC rule distinguishes between “senior executives” (who earn more than $151,164 per year and make policy decisions) and the rest of us. Noncompete clauses may remain for executives and not for the many bartenders, hairstylists, and others who are currently subjected to these contract restrictions. Still, business associations aren’t happy with the FTC rule.
The U.S. Chamber of Commerce filed suit against the FTC. The organization focuses on “reasonable noncompete agreements,” not those that, for example, limit people from working within “hundreds of miles away or many years after leaving a job.” The suit questions the FTC’s authority and claims “irreparable harm to businesses and employees” and argues for delaying implementation.
Ryan, a tax company in Texas, also filed suit, announced in this news release. The firm’s focus is on damage to “IP protections and talent development and retention.”
Students will find additional arguments—and will have their own experiences and ideas to share. If they have signed employment contracts, they could compare the noncompete clauses, and they might reconsider signing such an agreement in the future.
