Florida Businesses May Soon Lose Access to Non-compete Clauses

Business owners in Florida often use noncompete clauses to ensure their best and brightest employees don’t walk over to competing businesses, taking important information and practices with them. These clauses are a tool to secure the long-term success of your organization. These contractual agreements, however, may soon be null and void.

The Federal Trade Commission (FTC) is proposing a new rule that would ban non-compete clauses, which they say “hurt workers and harm competition.” This comes after President Joe Biden’s administration recommended this exact rule in an executive order issued in July 2021.

If the FTC rule is implemented, officials claim it would increase wages across the country by $300 billion per year as well as open up the employment of 30 million American workers who are currently locked into non-compete clauses. Florida businesses need to prepare for these and other potential impacts to come.

Another aspect of the proposal that must be noted is that it would not just eliminate traditional and transparent noncompete clauses. The rule also bans any terms of an employment contract that have the same effect of prohibiting an employee from leaving the company to accept employment or start a competing business. 

This limits the options business owners have to prevent the transmission of certain confidential information or practices as well as limit recourse for training and other onboarding costs should an employee leave to a competitor in a short period of time.

For many companies, noncompete clauses are part of the negotiation. The employer gave something up in exchange for the signing of the clause. Any negotiated term that was given in exchange for the non-compete clause being signed must remain in place, even if the non-compete clause or similar terms are completely eliminated by the implementation of this rule. Employers will need to reconsider what those terms look like should the rule be finalized and implemented.

Florida business owners will still have options to protect their businesses and retain employees even if the Federal Trade Commission moves forward with the elimination of noncompete clauses. At Bryant Taylor Law, we care for your business and can help you protect your business through effective legal strategy. Contact our team if you need to get ahead of this potential change and are looking for legal pathways to do so.

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