FTC votes to phase out non-compete clauses

DELMARVA – The FTC has announced that it will begin phasing out the practice of non-compete clauses across many industries across the us.

The clause prevents employees from working at one establishment, and then working for a direct competitor within a geographic area or time limit, and in some instances even prevents the opening of new businesses.

The FTC found it would be unlawful for a former employer to dictate the decision-making of an employee past the point of their employment, a practice that in its decision cited increased hardships and a need to often move for employees let go from businesses that opted to enforce the clauses.

The decision is expected to face legal challenges, however, Salisbury Area Chamber of Commerce President Bill Chambers tells 47ABC, he believes it has a good chance of being upheld, and would further stack the deck in favor of workers against employers.

“The big issue with non-compete is employee retention. You’re giving employees a reason now to shop their services on a much more frequent basis, and
Health care, education, hospitality. I mean, just three, business sectors that generate the most tax dollars, not only on the eastern shore of the state of Maryland would be impacted” Chambers said.

According to the Associated Press, the rule, which doesn’t apply to workers at non-profits, is to take effect in four months unless it is blocked by legal challenges.