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.