The FTC estimates that nearly one in five American workers is subject to a noncompete, but in Silicon Valley, they are not enforceable, allowing for more freedom for employees to start new ventures without legal battles.
The FTC ban on noncompetes could result in the creation of 8,500 new startups annually and 17,000 to 29,000 additional patents each year, offering more opportunities for innovation and entrepreneurship.
While the new rule does not apply to non-disclosure agreements, employees could still face legal issues if accused of revealing trade secrets. Existing noncompetes for senior executives will remain enforceable.
The U.S. Chamber of Commerce plans to sue the FTC over the ban on noncompetes, claiming the commission overstepped its legal authority in implementing such a regulation.
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