The FTC eliminates a corporation’s ability to limit the employment prospects of its former employees:
Pursuant to sections 5 and 6(g) of the Federal Trade Commission Act (“FTC Act”), the Federal Trade Commission (“Commission”) is issuing the Non-Compete Clause Rule (“the final rule”). The final rule provides that it is an unfair method of competition—and therefore a violation of section 5—for persons to, among other things, enter into non-compete clauses (“non-competes”) with workers on or after the final rule’s effective date. With respect to existing non-competes—i.e., non-competes entered into before the effective date—the final rule adopts a different approach for senior executives than for other workers. For senior executives, existing non-competes can remain in force, while existing non-competes with other workers are not enforceable after the effective date.
This is definitely a positive development. The idea that a corporation should be able to coerce an employee into agreeing not to work for a competitor without compensation is one of the pernicious consequences of Clown World’s contract morality, in which everything is permissible so long as the victim can be coerced, forced, scammed, or otherwise convinced to agree to it.
