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Non-Compete Agreements Going Away?

Over the years the courts have been limiting, if not outright striking, non-compete agreements which prohibit employees from working in their chosen profession for a period of time or in a geographic area.

Those agreements can be extremely harmful to the employee, and limit competition in the markets. The reality is that employers have an interest in protecting their intellectual property, but that protection can be provided by a carefully drafted confidentiality agreement and non-solicitation agreement, protecting trade secrets and other proprietary information. Banning an employee from working in his or her chosen profession is not necessary.

The FTC has taken up the issue, proposing a ban on non-compete agreements.

The Federal Trade Commission proposed a new rule that would ban employers from imposing noncompetes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.

The FTC is seeking public comment on the proposed rule, which is based on a preliminary finding that noncompetes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act.

The FTC press release is online. Forbes’ commentary on the proposed rule is also worth reading.

Mark Astarita represents financial advisors across the country in all aspects of their professional careers, including drafting, and litigating non-compete agreements. Contact him at 212-509-6544 or by email at mja@sallahlaw.com, or visit The Securities Lawyer.
Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | mja@sallahlaw.com | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.

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