FTC’s Final Rule Banning Worker Noncompete Clauses: What It Means for Employers.
The Federal Trade Commission (FTC) recently issued a final rule that bans non-compete clauses, marking a significant change for many workers, including those in the orthopedics sector. This new regulation is set to impact approximately 30 million employees across the United States and will take effect in just 30 days.
Key Details of the Rule:
- Geographical Impact: The ruling predominantly affects orthopedics employees in the East Coast and Midwest regions. However, it’s important to note that in California, where non-compete clauses have already been unenforceable, the orthopedics industry will see little to no change. This is because California’s existing regulations have served as a testing ground for such employment practices for years.
Implications for the Orthopedics Industry:
The ban on non-competes could potentially make it easier for top orthopedics companies to attract and retain the best talent without legal barriers.
Look at California for a preview of the effects on Orthopedics in the East Coast and Midwest. California employees freely move between companies like Alphatec, NuVasive, and SeaSpine, fostering a more dynamic and competitive industry environment.
The likely outcomes will be that more tribal knowledge is shared between Cali orthos and the salaries are driven higher in order to retain the best Cali ortho employees.
What This Rule Does Not Cover:
- Non-Solicitation Agreements: It’s crucial to understand that the new FTC rule does not affect non-solicitation agreements, which are based on customer domains. For instance, “the Sales execute cannot call on these surgeons/hospitals or cannot sell in these regions”. These agreements remain enforceable.
- Intellectual Property and Trade Secrets: The protection of IP and trade secrets is not impacted by this rule. Employers can still enforce regulations that safeguard their intellectual property and proprietary information.
Conclusion:
While the FTC’s ban on non-compete clauses represents a notable shift for many industries and regions, its impact on the orthopedics sector, particularly in areas like California, might be minimal. The realignment could, however, streamline talent mobility within the industry, thereby enhancing competitiveness and innovation. As the enforcement date approaches, employers and employees alike should familiarize themselves with the details of the rule and consider its implications for their career strategies and business operations.