Federal Trade Commission bans noncompete clauses, WKU professor says there are pros and cons

BOWLING GREEN, Ky. – It’s great news for many Americans, an estimated 30 million, but businesses might not see it that way.

The Federal Trade Commission has recently made a final ruling on what many have complained about for years, noncompete agreements. Noncompete clauses in employee contracts typically state that an employee cannot engage in the same line of work within a certain radius of their former employer for a set duration of time for fear of legal action.

According to the view of the FTC, noncompete clauses have a limiting factor on healthy competition, lower wages and contribute to a host of other issues. Included in the final ruling, noncompete causes will be banned after 120 days nationwide, and currently, active contracts will not be altered but employers must notify employees that the noncompete agreement will not be used against them after the grace period.

Western Kentucky University Professor of Management Dr. Aquesha Daniels told News 40 that businesses might see this as a negative, being that it will change how they engage with employees, but Daniels said there are other options for companies to take should they feel they need to safeguard sensitive information or retain workforce.