FTC moves forward with ruling to ban non-compete agreements nationwide
It’s a discussion that’s been going on for years: should companies be allowed to enforce non-compete agreements?
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Sheila Echazabal doesn’t think so. “The non-compete was just honestly a waste of a clause in the agreement,” said the business owner. She used to work as an eyebrow designer at a local salon in Orlando.
After she left that job because of family reasons, she started working freelance at another place within 25 miles of the previous one.
As a result, she got sued.
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“When you’re getting your eyebrows done, or your hair done, your nails done, your lashes done, whatever it is, even in other industries, if that client likes somebody else more, they’re allowed to pursue that person,” said Sheila. “If that non-compete was not in the contract, to begin with, I feel like I could have just left the day I needed to leave and just continued with my life without the added pressure.”
Sheila, who moved to South Florida so she could open her own studio, is just one of the many Americans who deal with the limitations triggered by non-compete agreements.
Back in 2023, the Federal Trade Commission issued a “proposed rule” that would effectively ban non-compete agreements across the entire country.
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Because the FTC is a federal agency, there was a 90-day period of public comment so people could provide feedback on the proposal.
Over that time, they received more than 26,000 comments, more than 25,000 of which were in favor of a ban.
On Tuesday, the agency approved the measure.
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Richard Sierra, an attorney with Legal Council P.A., explains that a possible nationwide non-compete ban is not a simple matter.
“It’s a weighing between the two sides. The employer sees it as an unfairness. They bring somebody on, they train them, they teach them, and then he goes off and competes against them and undercuts them,” said Sierra. “The employee says “look, I think I can compete I can probably sell or provide this service cheaper, and generally more competition is good for the general public.
According to the FTC, 1 in every 5 Americans is under some sort of non-compete agreement; this change would impact as many as 30 million workers – about 18% of the workforce, according to the agency.
Employers will have 120 days to adjust to the change once the ruling is published in the Federal Register, but legal experts already predict that companies will appeal the measure.
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