The Federal Trade Commission (FTC) last week proposed a near-total ban on noncompete clauses for employees and contractors, calling them an "unfair method of competition." The rule would prohibit employers from enforcing existing noncompete clauses and making them a condition of future employment. If it can survive legal challenges, the FTC's ban on noncompetes would have a massive impact on the rights of employers and workers. The noncompete clause usually sets a time or geographical limit within which an employee is barred from working for her employer's competitors or starting her own competing business. While there is broad agreement that noncompetes have been abused by employers, they also serve to protect proprietary data and incentivize companies to train their workers. In many contexts, noncompetes foster a mutually beneficial exchange between firms and workers. For instance, a worker who contractually agrees not to leave for a competitor in the same region may in turn receive skills training at his company he couldn't otherwise obtain.
Click for Full Text!
