The Federal Trade Commission (FTC) has proposed a rule to ban the use of non-compete clause. It FTC’s opinion that non-compete is “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”
Having read this news, our Philadelphia, Bucks County, and Montgomery county clients and employers are asking “how can I best protect my business without a non-compete clause?”
The rule proposed by the FTC makes it illegal for an employer to:
Although the rule has not yet been approved or implemented, small business owners should think about how it might affect their company and employees if it is ultimately approved.
The proposed FTC non-compete ban would apply to non-compete agreements in Pennsylvania for independent contractors and employees. Further, the rule would also require that the employer rescind all existing non-compete agreements and actively inform the workers that the non-compete is no longer in effect.
In our blog post on non-compete agreements, we explained that the purpose of the non-compete clause is to ensure that an employee does not learn the secret inner workings of the business only to use that information to compete with the company. However, without a non-compete, there are other mechanisms by which an employer can protect themselves, such as a non-solicitation agreement, a confidentiality clause, and other protections typically provided to trade secrets and non-public company information.
Without a non-compete agreement, an employer can implement the following restrictions on an employee to protect their revenue sources and intellectual property:
Because the laws and regulations on non-competition are constantly changing small businesses should consult with an attorney that regularly litigates and enforces non-compete agreements in their state. At Kaminsky Law we have a wide range of experience with non-compete clauses and non-compete agreements. We have drafted and enforced non-competes for our small business clients. Our lawyers have also helped employees get out of overly restrictive non compete agreements.
At Kaminsky Law, we have the experience with employer and employee issues to help you navigate Pennsylvania’s non-compete and employment law. Moreover, Kaminsky Law can also help you with any other legal business issues like business disputes, litigation, and real estate.
Contact Kaminsky Law for a free consultation today at 215-876-0800 or fill out a contact form here!
Kaminsky Law is a small business-oriented litigation Law firm licensed in Pennsylvania and New Jersey with cost-effective approach to lawsuits, settlements, and dispute resolution.