More change may be on the horizon for the labor landscape — and employers will have to do their best to keep up.
The Federal Trade Commission proposed a new rule that would ban employers from imposing non-compete clauses on their employees. Non-compete clauses are meant to stop workers from entering into a similar profession with their employer's direct competitor and sharing sensitive information. But ultimately these clauses may have helped stagnate wages and career mobility for millions of workers, says Vathana Sivanesan, who is part of the HR consulting compliance team at advisory firm OneDigital.
"Non-competes traditionally were to help employers protect their valuable confidential information accessed by highly compensated employees and upper management," says Sivanesan. "But there's concern that non-competes are used on lower-wage individuals who might not even have that kind of information. It's affecting way more Americans than it should."
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In fact, 30 million Americans are bound by non-compete clauses and are essentially restricted from pursuing potentially better employment opportunities. The FTC estimates that by banning non-compete clauses,
"Removing a non-compete means that workers can freely leave their employer, have more opportunities for advancement with a different employer and even pursue higher wages," says Sivanesan. "But employers are probably afraid of their current employees leaving their organization for a direct competitor and sharing trade secrets."
Sivanesan advises employers to take the time to review who has access to sensitive information and tailor any confidentiality agreements to specifically address critical company insight. That way, if and when an employee chooses to leave for a competitor, they know exactly what they are legally allowed to share from the experience they gained in their previous position.
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This ban would also reinforce the fact that employers need to strengthen their
"This is reflective of what's been happening over the past few years: employees want to be able to pursue better opportunities," she says. "If employers want to retain their good employees, they have to continue to keep an open dialog with their employees on how to best retain them."
No one can say for certain whether the ban will go into effect — at least not without pushback. Sivanesan predicts that while the ban could go into effect as early as September, there will be a number of legal challenges against it. As of now, the FTC's proposal is in the public comments period until March 10, meaning interested parties can submit feedback online, and in turn, see other comments on the ban. Once the public comments period closes, the FTC will conduct a review and potentially make revisions.
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Regardless of the outcome, Sivanesan doesn't believe this should be cause for too much concern. If employers are already in the habit of creating and reviewing precise confidentiality agreements and have been making strides towards a more attractive work culture, this ban isn't likely to change the course of their company.
"As an employer, don't panic over this proposed rule," says Sivanesan. "No one can really predict the future of how this is going to go, so just take reasonable steps to prepare."
