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FTC reviews non-compete agreements

On Behalf of | Apr 20, 2022 | Contract Disputes

There are many workers in New York who have signed non-compete agreements. These agreements are usually required by a potential employer as a condition of employment. Not only do employers want to control the employee while they are under contract, they want to restrict them from similar employment if they choose to leave. This effect that employers can have on former employees is now being challenged, and the Federal Trade Commission is preparing to issue a new ruling regarding the legality of the mandate from employers.

How the contracts apply

Non-compete contracts are relatively simple in their goal. They are required to protect the employer from costly competition when an employee leaves. Many employers actually are not concerned with private information as much as they are competition within their economic sector when talented workers leave them. All companies make profit from the talent of their employees. However, the overwhelming use of these contracts by employers has resulted in many contract disputes.

FTC goals in evaluation

The Biden administration was very vocal about the need to alter this practice with the implementation of the Freedom to Compete Act. The required contracts unreasonably restrict the potential for employment for many workers across the United States. Most individuals gain experience with an initial employer to use in applying for work with other potential employers who will consider their experience as a major plus in adding the applicant to their roster. The result has been a flood of breach of contract lawsuits in courts.

It appears that the FTC may be in a better position to rule on the issue now with the naming of a new member to the advisory board. Previously, the vacancy had left the board in a 3-3 lock and basically in stalemate on this and many other issues.