This proposed rule could make it easier to find a job after you leave or lose one

A man leaves an office with a box of his things after being fired.

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It could give workers a lot more freedom.


Key points

  • Non-compete clauses can limit workers’ options when separated from their employers.
  • A new proposal could give workers more rights to do the job they want.

When you take on a new job, it’s typical to have a lot of paperwork to fill out. That could include tax forms and a host of different contracts designed to protect your employer.

One of those contracts is non-compete. Whether you sign one as your own agreement or as a clause within a larger employment contract, a non-compete agreement prohibits you from working for your employer’s competitors for a period of time after you part ways with that company. For example, you may be required to sign a non-compete agreement that prohibits you from working for a competitor for six to nine months after you leave your job, either voluntarily or due to layoff.

But non-competition can be very limiting. Let’s say you have specialized skills and work in a fairly specialized industry. In that case, there’s a good chance that any other company looking to hire you will be seen as a competitor to your employer. That could leave you in the very difficult situation of not being able to work for several months and, as a result, having to completely deplete his savings.

But a new proposal could make non-compete clauses and agreements a thing of the past. And if carried out, it could be a very positive development for the workers.

When you are held by a contract

At this time, non-compete clauses are not illegal, although in some cases they can be difficult to enforce. But the Federal Trade Commission recently proposed a new rule calling for non-compete to be prohibited. If passed, it could open the door to more employment opportunities for many workers who end up separating from their employers.

This new proposal not only seeks to prohibit non-compete agreements, but also seeks to cancel existing non-compete agreements that have already been signed. In total, almost every industry could be affected by this change.

What makes non-compete so frustrating for workers is that its language is often confusing and open to interpretation. Some non-competitors, for example, do not clearly define what a competitor is. This makes it difficult to know what employment opportunities workers are legally allowed once they separate from their employers.

Worse yet, workers are not released from their non-compete obligations in situations where they are fired through no fault of their own. Now, imagine that you are a dedicated worker who just lost your job due to the need to downsize your business. You didn’t do anything wrong, and it wasn’t your choice to quit your job. However, he now has limited options for finding a new role thanks to his non-competition. If this proposal passes, all that could change.

an important development

The National Employment Law Project estimates that more than 30 million workers, at least 18% of the total US workforce, are forced to sign a non-compete agreement as a condition of employment. The non-compete ban could help ensure that millions of workers are not subjected to undue hardship finding work because of these one-sided clauses and agreements.

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