{"id":242,"date":"2020-01-25T09:15:51","date_gmt":"2020-01-25T09:15:51","guid":{"rendered":"http:\/\/https:\/\/fire.h50.us\/~rehalaw\/?p=242"},"modified":"2022-05-12T09:16:20","modified_gmt":"2022-05-12T09:16:20","slug":"ftc-considers-rule-limiting-use-of-noncompete-agreements","status":"publish","type":"post","link":"https:\/\/fire.h50.us\/~rehalaw\/blog\/2020\/01\/ftc-considers-rule-limiting-use-of-noncompete-agreements\/","title":{"rendered":"FTC considers rule limiting use of noncompete agreements"},"content":{"rendered":"

The U.S. Federal Trade Commission (FTC) said in early January it is weighing a rule that would curtail companies from forcing employees to sign noncompete clauses that prevent them from working for competitors.<\/p>\n

The announcement came after 19 state attorneys general wrote a letter last summer urging the FTC to limit or ban the agreements, which they say prevents workers from finding a better job or starting their own businesses.<\/p>\n

The use of noncompete agreements has steadily grown<\/strong><\/p>\n

While noncompete clauses are thought to have begun for professionals, such as doctors and tech workers, they are now widely used, even for low-wage jobs requiring minimal training. Many companies use them to protect trade secrets.<\/p>\n

A famous dispute arose in 2016 in Illinois involving the fast-food restaurant Jimmy John\u2019s. As part of a settlement agreement, Jimmy John\u2019s removed the clause in its hiring contracts that banned its workers from taking jobs at competitor sandwich shops. The state argued, in that case, that the noncompete agreement was illegal.<\/p>\n

FTC commissioners are skeptical of agreements<\/strong><\/p>\n

Any decision on a rule limiting the\u00a0use of noncompete contracts<\/a>\u00a0will be made by the five FTC commissioners, of which three are Republicans and two are Democrats. One Democrat says she has not made up her mind but adds the agreements cause workers problems even in states where they are unenforceable.<\/p>\n

A Republican commissioner agrees noncompete agreements limit workers\u2019 abilities to find new jobs, but says he is reluctant to take up the issue without any direction from Congress or any historical legal precedents to point to in making a ruling.<\/p>\n

Are noncompete agreements enforceable in Colorado?<\/strong><\/p>\n

Colorado\u2019s attorney general did not sign the letter to the FTC in support of a rule limiting or banning the practice. However, noncompete agreements are typically not enforced in the state unless they meet four exceptions:<\/p>\n