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Is this the end of noncompetes?

As an employee, you may have had little choice but to sign a noncompete agreement. Many businesses make it a condition you sign one if you want to work for them.

For years, there have been major concerns among many about the negative effects of noncompetes. Some claim they cost employees and the country billions because people with great ideas for new businesses are not free to implement them.  Their current or previous employer had them sign a noncompete that restricts their ability to leave and set up something in that same field. Or, limits their ability to move to another company that could better use their talents.

On April 23, the Federal Trade Commission passed a final ruling to ban noncompetes. While it won’t apply to senior executives who already have a noncompete, it will free the vast majority of employees from theirs, as the ruling is to be applied retroactively. Employers will have to write to their employees to inform them that any noncompete they signed is no longer applicable.

Expect challenges

While the FTC made a final ruling, challenges will need to be heard and a successful challenge could undo the changes made. The U.S. Chamber of Commerce is one of those lining up a legal challenge, claiming the FTC’s decision is “not only unlawful, but also a blatant power grab that will undermine American businesses’ ability to remain competitive.”

It remains to be seen how things turn out. However, if you are unhappy at being restricted by a noncompete, it’s important to remember that you may still be able to challenge them, regardless of whether the new ruling holds or not.