On April 23, the FTC voted 3-2 to ban noncompete agreements, which currently deter 18% of the US workforce from switching jobs within their industries. If it stands, the rule will ban all future noncompetes as well as nullify preexisting noncompetes for all but select Senior Executives.
While the US Chamber of Commerce has filed a federal lawsuit in hopes of blocking the new rule, it’s worth exploring what the ban would mean for your business:
Expanded Talent Pool.
A noncompete ban would allow easier recruitment from direct competitors, something especially advantageous for sales and technical roles. With restrictions lifted, new hires can leverage industry experience and relationships to make a more immediate impact.
Increased Poaching.
While reveling in your newly expanded talent pool, your competitors can more easily poach your employees. While there’s never a wrong time to make your employees feel seen, empowered, and valued; now is a great time to revisit and enhance your retention strategies.
Compensation Negotiations.
The FTC’s final rule does not nullify existing noncompetes for Senior Executives earning more than $151,164 annually who hold policy-making positions. That segment represents less than 1% of total workers, and you should be prepared for those Executives to negotiate compensation to offset their restrictions.
