|
Click here to watch this article |
In a move that has since sent shockwaves across the country, the Federal Trade Commission (FTC) voted 3-2 to ban non-compete agreements, with the rules going into effect 120 days after they are officially published in the Federal Register. There is no doubt that this decision will have a huge impact on both employers and employees alike, but what about Black entrepreneurs?
The FTC defines a non-compete clause as “a term of employment that prohibits, penalizes, or functions to prevent a worker from (1) seeking or accepting employment with another person in the United States;” I am. If such work commences after termination of employment, including term or condition. or (2) operate a business in the United States after termination of employment, including any term or condition. ”
Historically, non-competes have been used to restrict employees from working in the same industry after leaving their previous employer. Although intended to protect a company’s intellectual property, non-competes often have a negative impact on competition in product and service markets, especially with Black workers.
If properly written, most non-competing companies will provide specific restrictions on current or former workers, who can be an employer, where they can work for that employer, and who they can work for. It outlines the period during which you are not permitted to do so. to place an undue burden on oneself. Imagine being told who to work for and who not to work for. It’s basically a non-compete. Those who want to sign a non-compete and increase their pay may need to accept the status quo or change industries and possibly locations. These are all unnecessary hassles that limit competitive markets and perpetuate wage suppression.
I reviewed the contracts of several Black clients I’ve worked with in a variety of fields, from technology to entertainment. Many of my clients have wanted to venture out and hang up the proverbial “shingle” to mark the start of their business, but are deterred by these non-compete clauses. .
Approximately 18% of the approximately 30 million workforce is subject to non-compete agreements. There’s a saying in the black community: “If white people have a cold, black people have pneumonia.” What this essentially means is that if the majority of Americans suffer from a particular disease, that disease has already been, is, or will continue to be suffered by black people. Here, if many Americans are experiencing the effects of wage restraint and restrictions in the marketplace, black communities are feeling them even more acutely. Add in black workers who want to start on the path to entrepreneurship, and you have a nearly impossible task to accomplish.
The FTC estimates that the impact of non-competes could increase workers’ wages by $300 billion and could lead to the creation of more than 8,500 new businesses each year. For Black entrepreneurs, eliminating non-competitor companies has opened the door to new innovation, creativity, and fairer competition in the marketplace. The ban will allow employers to attract top talent by removing restrictions on the movement of skilled workers. Therefore, strengthen your business and increase your competitiveness.
That said, there are some legal challenges to enforcing the FTC’s non-competes. Within 24 hours after the voting results were announced, both the U.S. Chamber of Commerce, the world’s largest business association, and the Business Roundtable, an association of chief executives of America’s largest corporations, filed lawsuits against the federal agency. woke up.
In a statement announcing the lawsuit, the U.S. Chamber of Commerce declared:[t]The FTC argues that its regulations make it easy to declare common business practices “unfair methods of competition” and therefore illegal. This is despite the fact that non-compete agreements have been around longer than the 110-year-old FTC, and no one has ever suggested that they are illegal. ” It is further stated:[i]If the FTC can regulate noncompete agreements, it can also regulate or prohibit other business practices. All without a vote of Congress. ”
I believe that many more companies, organizations, associations, and associations will file lawsuits and lobby for what they believe is the Federal Trade Commission’s overreach in controlling commerce. Additionally, the effective date may be postponed if any of the federal courts hearing the case decide to grant a stay or preliminary injunction against the judgment. If the case is then appealed, a decision could be delayed for many more months.
So while it may take some time for this non-compete to go into effect, Black entrepreneurs should start preparing to take advantage of it.
