Veterinarians who feel shackled by restrictive non-compete clauses in their employment contracts are not alone. In July 2021, President Biden signed a broad “Executive Order Promoting Competition in the American Economy.” The White House estimated that “roughly half of private-sector businesses require at least some employees to enter non-compete agreements, affecting some 36- to 60-million workers.”
Recognizing that non-compete clauses can stifle competition in the workplace and harm workers, the White House encouraged the Federal Trade Commission (FTC) to either “ban or limit non-compete agreements.”
2023 Proposed FTC Rule
A year later, the National Employment Law Project (NELP) put the number of American workers affected by non-compete clauses at 30 million, about 18% of the country’s workforce. The NELP noted that “less than 10 percent of workers” even try to negotiate non-complete clauses, which often are presented as “take it or leave it” employment agreements.
Veterinary clinics and other employers can argue that non-competes are necessary to protect their often-substantial investments in hiring and training new employees. Non-competes impose time or geographic restrictions on where the worker can establish a competing business after leaving the company.
Although there is a logic to the argument, the FTC took the side of employees burdened by restrictive contracts and proposed a “Non-Compete Clause Rule.”
The proposed rule would provide that it is an unfair method of competition for an employer:
- to enter into or attempt to enter into a non-compete clause with a worker;
- to maintain with a worker an existing non-compete clause; or
- to represent to a worker that the worker is subject to a non-compete clause.
The proposed rule would apply to anyone who works for an employer, including independent contractors. It would also require employers to rescind existing non-competes and actively inform workers that they are no longer in effect.
The proposed rule was published in the Federal Register on January 19, 2023. The period for public comments on the rule has been extended from March 20 through April 19. Through early March, more than 16,000 comments have been submitted.
If you want to comment, visit https://www.regulations.gov/commenton/FTC-2023-0007-0001.