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Does your company need to scrap its non-compete agreements?

On Behalf of | Mar 13, 2023 | Business Law

Every state typically has its own approach to employment law matters. Businesses operating in Alaska generally need to abide by both state law and relevant federal laws that may apply. 

There is some reason to believe that a specific federal employment rule may soon change thanks to recent public announcements by the Federal Trade Commission (FTC). Specifically, the organization declared its intent to do away with non-compete agreements at the federal level. 

Does that mean that organizations in Alaska need to scrap their non-compete agreements and rework their employment contracts? 

Reworking the contract ahead of time might be smart

There are always reasons to delay making major changes to company contracts. Even if the FTC announces a new rule banning non-compete agreements, such announcements typically have a bit of lead time before they take effect. 

In fact, there is a good likelihood that there would be a delay in implementation due to legal pushback from organizations including the United States Chamber of Commerce. However, should the policy change, businesses will have to quickly rework their employment contracts and may be vulnerable in the interim. 

Some organizations may see the value in phasing out non-compete agreements by replacing them with other contractual inclusions instead of trying to keep using and enforcing those agreements for as long as is feasibly possible. Of course, negotiating new contracts will be its own challenge, as companies may need to create something of valuable consideration to offer in exchange for workers making concessions in their new contracts. 

Tracking significant changes to employment laws will help companies more effectively protect themselves when hiring new workers and renegotiating existing contracts.