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Business contracts can no longer use noncompetes 

On Behalf of | Jun 13, 2024 | Contract Disputes

In the past, some business contracts would include noncompete clauses. Employees who signed these would give up their right to work for the competition. If an employee quits their job, they may not be allowed to work for a competing company in the same area or for a certain amount of time – such as 12 months after leaving the previous position. 

However, the Federal Trade Commission has recently banned noncompete agreements for most workers. Moving forward, employers should not ask their employees to sign these agreements, as they wouldn’t stand in court. Additionally, even if employees did sign the noncompete agreements in the past, they would no longer have to abide by them. Both employers and employees need to know that these contracts no longer have any legal standing.

What are the exceptions?

As noted above, this change applies to most workers, but there are exceptions. These typically apply to executives at high-level positions who have already signed noncompete agreements. In rare cases, these individuals – such as CEOs or CFOs – may need to abide by their noncompete agreements. 

But the majority of American workers are not going to fall into this category. They are just hourly wage employees or perhaps salaried workers, and they do not qualify as executives. Even if they already signed noncompete agreements, they do not have to abide by them moving forward.

Employment disputes sometimes revolve around the contracts that employees have signed, and it’s important to understand how the laws change and how this may affect their rights. When a dispute arises, all involved must know what legal steps to take.