Noncompete agreements banned in the U.S. by the FTC | TechCrunch Minute

This week the FTC voted three to2 to ban Non-compete agreements throughout the United States that means if you are Leaving your current job you can go to Work for a direct competitor or start a Competitor of your own and your old Employer can't do anything about it While the FTC estimates that nearly one In five American workers is subject to a Non-compete making it harder for them to Leave their job or start a new business FTC chair Lina Khan is making some big Claims about how this will affect the American economy She says quote non-compete clauses keep Wages low suppress new ideas and Rob the American economy of dynamism including From the more than 8,500 new startups That would be created a year once Non-competes are banned by the way this Is the same Lina Khan who's been pretty Aggressive and pretty controversial in Going after big tech companies over Antitrust issues Beyond leading to new Companies the FTC says this new rule Will increase wages for the average Worker by an addition $524 per year lower health care costs by Up to $194 billion over the next decade And lead to an estimated average Increase of 177,000 to 29,000 more Patents each year for the next 10 years Despite these supposed benefits not Everyone is happy about this new rule in

Fact the US Chamber of Commerce says it Plans to sue the FTC arguing that the FTC doesn't have the authority to make This new rule if the rule does manage to Withstand a court challenge when it Takes effect existing non-competes will Be invalidated unless you are a senior Executive and moving forward companies Will not be able to ask even those Senior Executives to sign new Non-competes it's also worth noting this Rule is focused on non-competes not ndas So if you've signed an NDA you still Won't be able to share those Fun Trade Secrets with your new boss what does This mean for Tech well non-competes are Already banned in California so it's Really not a big issue in Silicon Valley That said Silicon Valley doesn't have a Monopoly on Tech or on Innovation Especially as remote and hybrid work are Spreading in fact despite what I just Said about California research from the Universities of Michigan and Maryland Found that 36% of Engineers and Architects work under non-competes as Well as 65% of workers in computer and Math plus you could argue that the Absence of non-competes in California is A competitive Advantage for Silicon Valley if you're an employee for a big Tech company you're able to leave or Start a new company without worrying That you're going to spend the next few

Years in court now imagine that Happening throughout the United States Someone is working for some big old Legacy company and they have an idea About how things can be done better of Course we don't know yet whether the Ftc's very impressive predictions about All these new startups and all these new Patents will actually come true but what Does seem indisputable is that this will Be better for employees if you're Currently tied up with a non-compete or If you're considering a job offer that Would require you to sign one in the Future you may not have to worry about That that should lead to more Opportunities and potentially higher pay In the meantime maybe you should start Thinking about quitting your job and Starting something new Alex Wilhelm will Be back next week but in the meantime I'll have more for you tomorrow


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