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The Five Things CHROs Need to Know About the FTC's Proposed Non-Compete Ban

By Dan Yager posted 02-10-2023 00:00

  

A new guide by HR Policy’s Dan Yager covers the top five considerations for CHROs and their teams as the noncompete ban issue progresses. The guide addresses the sweeping breadth of the FTC’s proposal, the issue with “de-facto” non-competes, the complicated path forward for companies and policymakers, and other key factors. 

Meanwhile, the Washington Post Editorial Board proposed limiting a ban on noncompete agreements to workers earning under $107,000 a year, similar to Washington state’s noncompete ban. 

The editorial noted the ability of more highly paid employees to assess noncompete agreements. However, “Workers earning less than six figures don’t have the clout to negotiate the terms of a noncompete,” the editorial states, “or hire lawyers to read over every paper they sign when taking a job. From an employer perspective, it’s difficult to argue that someone paid below an executive salary is so critical to a company that they should be barred from moving on and working elsewhere.” 

“We’re banning those agreements:” President Biden’s celebratory tone addressing efforts to ban non-competes in his State of the Union address did not acknowledge the complicated path forward, likely including legal challenges to a final FTC mandate and legislation such as Sens. Chris Murphy (D-CT) and Todd Young’s (R-IN) “Workforce Mobility Act.” That bill,  like the proposed FTC rule, would ban all non-compete agreements except in limited cases of business sales. You can read more about President Biden’s State of the Union address here

Next week, the FTC will host a public forum examining the FTC’s proposed rule and providing an opportunity for stakeholders to directly share their experiences with such agreements. HRPA will provide a witness to articulate the business community’s view opposing a total ban on noncompete agreements. Meanwhile, HRPA will submit formal comments to the FTC on its proposed noncompete agreement ban.

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