Patrick Miller-Bartley
Tue, 01/17/2023
Explaining that, by keeping people from switching jobs, non-compete agreements deprive workers of higher wages and better conditions, and deprive less-established businesses of talent, the FTC has proposed a rule barring these agreements. In addition to prohibiting the creation of new non-compete agreements with both employees and independent contractors, the rule would also require companies to nullify any existing non-compete agreements within six months. A U.S. Treasury report from March 2022 found that about one in every five workers is covered by a non-compete agreement, with that number rising to as high as 45% in the tech and medical fields. The FTC will accept public comment on the proposal for the next 60 days before issuing a final rule.
In addition to future action from the FTC at the federal level, many states currently restrict non-compete agreements to at least some extent. For example, D.C.’s Ban on Non-Compete Agreements Amendment Act of 2020 took effect on October 1, 2022. This Act prohibits non-compete agreements for all employees who make under $150,000 a year (as of 2022; this number increases with inflation). Virginia also bans non-competes for workers earning under $1,290 per week, or $67,000 per year (this number is for 2022, and should soon be adjusted upward for 2023). Similarly, Maryland prohibits non-compete agreements for certain employees, but only if they make less than $15 per hour, or $31,200 per year. However, Maryland’s law also bars anti-moonlighting provisions for such employees, invalidating attempts by employers to keep them from working additional jobs.
Even people who earn above those income thresholds may still find that their non-competes are unenforceable under other provisions of the law, and anyone needing assistance with a non-compete should not hesitate to contact MSE. MSE has substantial experience representing workers to ensure the best possible outcomes in disputes with their employers.
