Federal Trade Commission Bans Non-Compete Agreements: What This Means for Employment Law

Federal Trade Commission Bans Non-Compete Agreements, Employers Up in Arms

In a groundbreaking move this week, the Federal Trade Commission (FTC) has decided to ban the use of non-compete agreements in the workplace. This decision is expected to increase worker earnings by over $488 billion over the next decade. However, the ban will not affect existing agreements signed by senior executives. Any new non-compete agreements are prohibited, and any currently outstanding non-competes with employees earning less than $150k are now null and void.

Unsurprisingly, employers are not pleased with this development. Lawsuits have already been filed challenging the FTC’s power to implement such a ban. Banks and hedge funds, known for their frequent use of non-compete agreements, are expected to be particularly impacted by this decision.

While most banks and insurance companies are not subject to FTC regulation, hedge funds and their employees will be covered by the ban. The FTC rule explicitly prohibits the use of NDAs, non-solicitation agreements, or no-hire agreements to create non-competes through alternative means.

However, the ban on non-competes may lead to increased litigation and challenges for employees in the hedge fund industry. Aggressive employers may still find ways to intimidate portfolio managers and other employees looking to make career moves.

The ban on non-competes could also have unintended consequences, such as reducing the talent pool available for hedge funds to recruit from. This may lead to increased competition and higher salaries in the industry.

Overall, the ban on non-compete agreements is a significant development in the world of employment law. It remains to be seen how employers and employees will adapt to this new regulatory landscape and what implications it will have for the future of work.