The Federal Trade Commission (FTC) sets out to develop policies that affect competition, consumers, and the United States economy as a whole. So on April 23, 2024, the Commission ruled to ban non-competes nationwide, for all United States for-profit businesses to which its authority extends. Read on to discover the FTC’s most recent ruling on non-competes and how one of the seasoned Los Angeles employment lawyers at Stansbury Brown Law, PC can help you understand what this means for you.

What are non-compete agreements?

Upon onboarding for a new job position, the odds are that you first signed a non-compete agreement. This is a type of employment contract in which you agree not to compete with your employer for a certain period after your employment period with them is over. What’s more, this contract may have you agree not to disclose any of your employer’s proprietary information or trade secrets to competing parties during or after your employment period with them.

Of note, this contract may specify the exact period in which these restrictions are in effect, the exact competing parties that are off limits, and more. It may also disclose the damages that come with violating any of its terms, such as legal actions for injunctive relief and financial relief. But at the same time, there may be subliminal consequences to abiding by its terms. For example, this may leave you no choice but to switch to a lower-paying job, relocate for a job, or leave the workforce altogether if you cannot find an acceptable job.

What was the FTC’s most recent ruling on non-competes?

To reiterate, the FTC has now banned the exercising of non-compete agreements in all United States for-profit businesses. The reason behind this decision is the FTC believes an employee should not be prohibited from, discouraged from, or penalized for seeking or accepting different work or starting a new business in the United States.

Statistically speaking, the Commission predicts this most recent ruling may cause new business formation to grow by 2.7 percent and result in more than 8.500 new startups within the next year. Another estimation is that the average number of patents filed may increase from 17,000 to 29,000 per year for the next 10 years. Plus, the average employee may expect an increase in earnings by an additional $524 per year for the next 10 years.

Further, this ruling holds that employers must notify employees bound to existing non-competes that these contracts will not be enforced against them in the future. However, employers may still enforce existing non-competes for their senior executives. This ruling finally takes effect 120 days after its publication in the Federal Register.

When in doubt, someone at Stansbury Brown Law, PC is always willing to look into your case. So please retain the services of one of the competent Los Angeles employment lawyers today.