How a Federal Ban on Non-Compete Clauses Would Impact Florida Businesses

Non-compete clauses prevent employees from jumping from job to job, taking important trade secrets and proprietary information with them. According to the federal government, however, these clauses also suppress wages and limit innovation.

Two years after the Biden Administration issued an executive order asking for the Federal Trade Commission (FTC) to consider a ban on non-compete clauses, the FTC is going through the rulemaking process to potentially do just that. FTC officials claim doing so would raise wages across the country by nearly $300 billion per year, but what does this mean for Florida businesses that use these clauses in their contracts?

Ban Would Apply to Current and Future Clauses

The ban is not just for all future contracts. The FTC’s proposal, as it stands, applies to all current and former contracts, as well. This means any non-compete clauses in contracts that have already been signed would no longer be enforceable.

What this means for Florida businesses is that any assumed advantage you have over the competition because of restrictive covenants in your contracts would be lost. Your employees would be free to pursue opportunities with competitors in the same industry and market.

There is no guarantee the rule takes effect when voted on next year, but Florida businesses need to take this opportunity to prepare.

Protecting Trade Secrets and Proprietary Information

Without the use of non-compete clauses, Florida businesses must look to alternatives to secure their success. We would advise all businesses to thoroughly review their contracts today to review any restrictive language and add any additional language that protects certain types of information and practices.

Additionally, if your business is not already clearly communicating what is and isn’t considered a trade secret or proprietary information within your company then do so immediately. If employees are given more freedom to leave for other opportunities, you need to make clear what must stay in-house even after they leave.

The law states that businesses can’t expect someone to forego important, necessary, or common skills that allow them to succeed, but you don’t have to let software or unique, innovative techniques walk right over to your competitors.

At The Law Office of Ray Garcia, we will assist our clients in reviewing contracts when necessary, handle business litigation should it arise, and assist in protecting trade secrets and other intellectual property. Contact our team if you have any questions or need to get ahead of the possible ban on non-compete clauses.

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Law Office of Ray Garcia, P.A.

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