FTC ban on noncompete agreements comes under legal attack

NEW YORK (AP) — The federal government wants to make it easier for employees to quit a job and work for a competitor. But some companies say a new rule created by the Federal Trade Commission will make it hard to protect trade secrets and investments they make in their employees.

At least three companies have sued the FTC after it voted to ban noncompete agreements, which prevent employees from working for competitors for a period of time after leaving a job. Their cases are now pending in Florida, Pennsylvania and Texas and the issue could end up in front of the U.S. Supreme Court.

Here’s what you should know about noncompete agreements:

What are they?

Once seen as a way to protect trade secrets among high-level executives, noncompete agreements have become more common, with some companies requiring lower-wage employees in fast-food and retail establishments to sign them before accepting a job.

The agreements prohibit employees from taking a job with a rival company or starting a competing business for a set period of time, to prevent employees from taking corporate secrets, sales leads, client relationships or skills to a competitor.

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