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FTC Proposes Ban on Non-Compete Agreements, Impacting Millions of Workers

The FTC is proposing banning non-compete agreements.     This announcement on Thursday and The FTC estimates that 30 million people, or 1 in 5 workers, would be impacted, and the rule could increase wages by nearly $300 billion a year.

The new rule, however, would make it fully illegal for employers to enter into or maintain non-compete agreements with their workers and require them to notify workers that any existing non-compete agreements would no longer be in effect.

The proposed rule would generally not apply to other contract restrictions like non-disclosure agreements unless the restrictions were “so broad in scope that they function as non-competes,” the FTC said in a press release.   The FTC is asking for public comment on the proposal.

Why do we care?

In tech, this will be a big deal.     Let’s note that this is not an examination of Non-Disclosure Agreements.  If you’re worried about your secrets, that’s the NDA.  

Small providers won’t be spending the money on leveraging lawyers to enforce or intimidate around non-competes.    That said, it would free up talent more easily, moving away from larger firms.    The smaller you are, the less downside this has; for talent, it’s absolutely good news.   

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