The Federal Trade Commission (FTC) voted to ban non-compete agreements after more than a year of debate. Now that the ruling has been made,
"[This is] something that many employees have been asking for," says Christy Pruitt-Haynes, who serves on the leadership and performance faculty at NeuroLeadership Institute. "With a few minor exceptions, unless this is challenged, employees will be able to leave an organization and go work for anyone they want to. Non-competes have been challenged a number of times, and this ban solidifies the fact that they really restrict employees' abilities to move and give organizations an unfair advantage."
Read more:
By signing a non-compete agreement, employees were restricted from working for a company's rivals during or after their employment for a certain amount of time. These contracts are commonly used in multiple industries — such as sales and marketing,
Following the FTC's ruling on April 23, employers will be prohibited from entering into new non-competes with employees, or enforcing existing non-competes with workers apart from senior executives — a classification Pruitt-Haynes says is surely a hot topic of conversation throughout C-suites this week.
Read more:
While the rule does not take effect until August, organizations have a lot to think about over the next four months: According to the FTC, 30 million employees are currently under non-compete restrictions, and the new rule stipulates employers must communicate with workers that these clauses are no longer in place. This opens them up to the possibility of losing some very valuable talent should people decide to explore other employment options.
"Employers need to take this as a real wake up call," says Pruitt-Haynes. "In the past, certain organizations used non-competes to hold on to key employees, because with certain jobs in certain industries there are skill sets that are very specific, so a non-compete really limits or prohibits people from being able to advance their career."
Now, employers will need to be diligent in considering the employee experience, Pruitt-Haynes says, and ensure they are demonstrating a commitment to their success.
"Employers are going to have to think about what it is that employees want in their employee experience, and how they can deliver that in a meaningful way," she says. "[Employees should] want to be here, not stay because they have essentially been handcuffed to the organization."
Read more:
To remain an employee's top choice, employers should take the time to conduct retention interviews and ask, "What keeps you here?" Pruitt-Haynes says. She suggests the method of stop, start and continue: Speak with employees about what they would like the company would stop doing, what they wish the company would start doing, and what they hope the company continues to do. Job growth and development opportunities, fair compensation, flexibility, tuition reimbursement, company culture — it's about figuring out what keeps employees connected beyond the contract, she says.
"This ruling gives employees the opportunity to look for the culture and the experience that matters most to them," Pruitt-Haynes says. "Companies are going to have to get really creative with ways to expand jobs so people feel like they're growing within the organization."
For employees once bound by non-competes and now looking at newly available job options, Pruitt-Haynes advises they first assess what aspects of a job are most important. Whether they decide to remain with their current employer or leave, they should try and craft a deal that factors these things in.
"Remember, the grass isn't always greener on the other side; there may be a culture or practices that don't align with what you're looking for once you're inside," she says. "Make sure you do your research before jumping ship to ensure you're moving somewhere that is going to be a great fit."
