If you’re starting a new business, you may be considering different ways you can create stability for your workforce and protect your intellectual property. Naturally, this could lead you to the idea of noncompete agreements, which keep workers from leaving their jobs at your company and going to the competition.
But if you are thinking of doing this, it’s important to know that the Federal Trade Commission recently banned these agreements in their entirety. You can no longer use them, even though they have been very common in the past.
Moving forward, former employers will have no say in where employees work after they quit their jobs. Employees get the freedom to move around within the industry however they would like. The FTC believes this will increase their wages and provide other benefits.
What if the noncompete agreements already exist?
On the other hand, maybe you started your business five years ago and already have several employees who signed noncompete agreements. What happens to those agreements that were already made?
In short, they get thrown out. They are no longer going to be enforced for most workers. For some large corporations, existing noncompetes may stand for some senior executives. But this is one of the very few exceptions to the rule. It wouldn’t even apply to the vast majority of companies and small businesses in the United States.
That doesn’t mean you don’t have any options to create stability or protect intellectual property. It’s just very important to know what legal steps you can take and how the law has changed.