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U.S. bans non-compete agreements | HRD America

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Despite the ban, employers have alternatives such as trade secret laws and non-disclosure agreements (NDAs). The FTC also said that if employers wanted to retain employees without using non-competes, they can improve their wages as well as their working conditions.

Opposition to non-compete ban

But the FTC’s two Republican commissioners, Melissa Holyoak and Andrew Ferguson, said federal law does not allow the commission to adopt broad rules prohibiting conduct that it deems anticompetitive, according to Reuters.

“We are not a legislature,” Ferguson said. “I do not believe we have the power to nullify tens of millions of existing contracts.”

Major business groups representing an array of industries have also criticized the rule, saying non-competes are a crucial way for companies to protect trade secrets and that they promote competitiveness, said Reuters, and the U.S. Chamber of Commerce said that it will also file a legal challenge to the rule.

“This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy,” said Suzanne Clark, president and CEO.

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