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FTC Proposed Ban on Noncompetes May Face Strong Resistance

Business Insurance

  • January 17, 2023

The U.S. Federal Trade Commission earlier this month proposed a sweeping ban on noncompete agreements in employment contracts, but opponents say its implementation could be delayed or prevented by litigation charging the agency has exceeded its authority.

Others, though, welcomed the move, saying a ban would increase wages and promote economic development in states that don’t already have such provisions.

The insurance sector, which has seen a proliferation in employment-related litigation, particularly among brokers, over the past several years, may be less affected than other businesses because companies in the sector usually rely on nonsolicitation or nondisclosure agreements rather than blanket noncompetes. The FTC proposal, though, does create some uncertainty on the issue, experts say.

. . .

“Why do you need a noncompete for somebody making $35,000 a year?” said Bennett Pine, a shareholder with Anderson Kill in New York. State legislation focuses on higher-paid employees where it makes more sense, he said.

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