The FTC is making waves with its proposed ban on noncompete clauses. In case their stance isn’t clear enough, they call noncompetes “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”
How likely is anything to come from this? That remains to be seen — the Chamber of Commerce is already threatening to sue, and it’s hard to imagine any sweeping change happening without at least several bouts of drawn-out legal battles.
No matter where this lands, though, business owners and entrepreneurs should take note. Noncompetes are falling out of favor, and now is the time to shore up company policies and pursue innovation.
For Business Owners
Pretend that the FTC gets its way and all past, present, and future noncompete clauses are null and void. What might be impacted at your business?
Do you have contractual clauses in place that protect confidential and proprietary information without requiring a non-compete? An NDA or “non-solicit” is a safer long-term option.
Assess your service lines. What’s at risk if former employees go into direct competition with your business or if your top performers are poached? Make those contingency plans.
In any case, now is the time to solidify your unique selling propositions for clients and staying propositions for your employees. Build your positive company culture. Instead of telling employees they can’t compete, make it so they don’t want to.
For Entrepreneurs
This is the age of innovation. Anything attacking non-competes is a win for entrepreneurs. Now is a perfect time to work on your business plan for the company you’ve wanted to start or to begin the informal job search if you’re looking to move within your industry.
Even if the FTC’s rule fails, noncompete clauses have been increasingly viewed as unenforceable, especially in the tech sector. If you have a big idea, test the waters.
Noncompetes are usually seen as a hindrance to free markets and innovation. At Coalition Technologies, we want your business to thrive.