As a Plastics Recruiters, here is a recent article written in Plastics News written by me, Dan Regovich:
On April 23, the Federal Trade Commission issued a final rule that will ban noncompete agreements for a majority of U.S. workers.
There is not enough room in this column to unpack this entire ruling, but FTC claims that this will “generate over 8,500 new businesses each year, raise worker wages, lower health care costs and boost innovation.”
I’m not sure I understand the logic they used to come to these conclusions, but when a government agency makes claims like this, I’m extremely skeptical. There are sure to be many unintended consequences, good and bad.
Most noncompetes have something in common: They are mostly one-sided being slanted heavily towards the employer, and they are already hard to enforce in many states.
Noncompetes are largely used as a scare tactic. Some employers will sue a former employee knowing they can’t win, but want to cost their ex-employee many thousands of dollars in legal fees and a lot of grief for going to work for someone else in the industry.
They also hope to scare others within their company from working for a competitor. Perhaps the FTC got involved in this because of the one-sided nature of noncompetes? But having more government regulations in business is typically not good for business.
My first thought in hearing this new ruling was that employers may not like this, but employees will like it. But unless you own a company, you are in fact an employee. So, bad for owners and good for employees?
Employees should be able to go to work for the competition but with some form of nondisclosure agreement (NDA) or confidentiality agreement where that employee cannot share trade secrets or highly confidential information with the competition.
There have been many instances where employees have been sued by their previous employer but the previous employer did not win — unless their definition of winning was to cost the former employee a lot of money in legal fees, that is.
What I have seen, though, are employees who were successfully sued for sharing confidential information or trade secrets with their new company, and those instances seem to get more press.
The ironic thing is that many companies want to hire from their competition but frown upon their employees leaving for the competition. They will often do what they can to maneuver around a candidate’s noncompete, yet have strict noncompetes themselves.
There can be some good things from this from the standpoint of an employee who’s stuck in a job or at a company they don’t like. This would give them the ability to go somewhere else they can thrive or move up.
This may also create more problems for some employers by creating more competition for employees, driving up salaries and thus driving up the cost of the products sold.
This is what companies should do: Make your company a great place to work and do your best not to give your employees reasons to look for another job with your competition. Take care of your employees, care about them, invest in them and don’t treat them as a number. Make your company the one that the employees from your competition want to work for!
To see the article from the FTC click here
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