FTC Moves to Ban Non-Compete Agreements

A recent proposal from the FTC (Federal Trade Commission) would effectively ban the use of non-compete agreements by employers. Non-competes typically restrict employees from going to competitors for a certain time period or within a geographical area. Employers have typically used non-competes to help protect confidential information, trade secrets and customer lists.

Currently, regulations on non-competes has been done at the state level. The current proposal has a mandatory 60 day public comment period, where anyone can provide feedback. Experts in the area are anticipating that the final rule will look different than the current proposal.

The FTC believes this would help drive employee wages up, and make employers think differently about how they treat and retain employees. The US Chamber of Commerce has said they believe this proposed rule is “blatantly unlawful.” Regardless of what rule the FTC issues, there is a strong likelihood that there will a legal challenge.

So what does this mean for the transportation industry? In the last handful of years, brokerage companies have exploded (both in the number of start-ups and with record profits). A lot of companies have locked their top talent up with non-compete agreements. If the proposed FTC rule gets finalized, there could be a lot of companies looking at how they can incentivize employees to stay and could create opportunities for others to attract top talent. It’s certainly a good time to look at your current practices and be prepared for a potentially new recruiting environment.