Employers should identify agreements that contain restrictive agreements and take stock of employees who have entered into agreements. This includes a review of employee manuals and other policy documents, as well as letters of offer, onboarding agreements and severance pay terms that contain clauses that can be interpreted as limiting employee mobility. The wording of the order has given rise to much speculation about what will happen next and what the FTC will propose. Combined with the already ever-evolving patchwork of state laws restricting non-compete obligations and proposed (and reproposed) federal laws, the PO leaves many questions open in the already opaque legal landscape regarding restrictive agreements. While the final outcome is not yet clear, the ordinance and bill make it clear that changes are imminent. Employers should now take the time to consider how to protect their confidential information and trade secrets if their ability to do so could be further restricted by the use of non-compete obligations. The first of these considerations is simple. If an employee is asked to sign a non-competition agreement and is only informed of the existence of the agreement after the acceptance of the employment, the person is not able to assess the economic reality of the employment situation with all the available information. If the person is informed before accepting the job, they may choose not to work for the employer or negotiate a higher salary to compensate for the risk of legally binding unemployment in the future. Conversely, the above trend does not apply to higher-paid or better-educated workers. When evaluating CEOs and doctors, studies show that those who sign non-compete obligations are paid more than similar workers who do not, regardless of the applicability of the non-compete agreement. « In theory, workers could sue alleging that certain non-compete clauses under the Sherman Act are anti-competitive.
In practice, however, there are virtually no private disputes in this area. Given the absence of private litigation challenging non-compete obligations as violations of antitrust laws, the FTC may consider legislating on this issue. A provision could clarify when non-compete obligations are permitted or not. Continuing along this path by establishing rules will establish a general rule that would inform a much larger group of market participants than dealing with non-competition through arbitration. 26 Non-compete obligations in employment contracts (which, if they contain non-compete obligations, are called non-compete obligations) restrict or prohibit current employees from competing with their current employer in the future. There is evidence that the Federal Trade Commission (FTC) could adopt a rule that would prohibit or restrict the use of non-compete obligations in employment contracts. This guidance note examines the economic and legal policy issues that would be raised by such a rule. After briefly highlighting economic concerns and issues regarding the FTC`s rule-making in general, she turns to the details of such a potential rule. It then proposes a possible approach that the FTC could take if the FTC continued to legislate in this area to avoid creating an overly broad and potentially anti-welfare rule for non-compete obligations. In some cases, non-compete obligations are submitted and signed in countries where such agreements are unenforceable.
While there are some reasons why this could happen, discussing the various incentives to sign an unenforceable contract would be beyond the scope of this guidance note. Over the course of the two days, a series of panel discussions, presentations and remarks will focus on competition issues affecting labour markets and workers` well-being, including: monopson du travail; the increased use of restrictive contractual clauses in employment contracts, including non-compete obligations and non-disclosure agreements; information exchange and benchmarking activities between competing employers; the role of other federal agencies in ensuring fair competition in labour markets; and the relationship between antitrust law and collective bargaining in the gig economy. Panelists will be invited to discuss steps antitrust authorities can take to better target enforcement resources, improve public deliberation, and adopt a « whole-of-government » approach to ensuring fair competition for workers and consumers through the use of inter-agency resources. Second, document the pro-competitive justifications for non-compete obligations. Given that there are many pro-competitive justifications for non-compete obligations, it can be difficult for the FTC to establish a clear rule prohibiting all non-compete obligations or entire categories of them. The rules must necessarily be different depending on the industry and the nature of the work in question. B for example if the position requires highly skilled workers, wages, etc. and access to sensitive intellectual property, trade secrets, etc. It is therefore important that companies carefully update the non-competition policy in terms of scope, duration and scope, and carefully document the pro-competitive reasons for such provisions (i.e. where significant investments have been made in employees or to protect trade secrets).
Companies are well advised to consider whether existing non-compete obligations remain enforceable if an employee wishes to leave. The second criterion depends on whether the consumer – in this case the employee – can reasonably avoid the harm caused by the non-compete obligation if he is presented after the start of employment. If a non-compete obligation, previously discussed as a cause of reduced mobility and potentially lower wages, is presented after the start of employment and as a condition for continuing to work, new workers face a significant loss of bargaining power compared to their previous employment situation. They must choose between their pre-negotiated salary combined with limited job mobility (compared to their reasonable expectations before entering their new job) or unemployment. At this point, many workers are unable to negotiate a wage increase to compensate for the restriction of mobility in the future. Evidence of the economic impact of non-compete obligations is mixed. Most, if not all, studies of non-compete obligations focus on the applicability of such agreements and use a natural experimental framework to determine the impact of such agreements on workers` wages, investment and innovation. These studies examine changes in state laws over time to develop an understanding of the effects of non-compete obligations on similar workers in different states. Researchers use changes in the applicability of non-compete obligations to begin a natural experiment.
In these cases, they assess the impact of changes in the applicability of non-compete obligations on mobility, wages and entrepreneurship. .