Experts showcased widely different viewpoints on the Federal Trade Commission (FTC)'s recent proposal to prohibit noncompete agreements during a policy-driven webcast hosted by the Society for Human Resource Management (SHRM) on March 23. An attorney from the FTC defended the proposal, but a management attorney said the agency may have overstepped its authority and called the proposed rule overbroad.
SHRM—which is preparing a formal comment for submission to the FTC—believes the agency should differentiate between agreements designed to limit labor market mobility and those designed to protect confidential trade secrets or strategic planning.
"The broadly drafted regulation would jeopardize the ability of HR practitioners to require the repayment of education or training benefits; it would also endanger the use of nondisclosure and nonsolicitation clauses," SHRM said.
Defense of Proposal
Noncompete agreements stop employees from working for corporate competitors or opening their own competing business within a certain geographic area for a certain period of time after they leave the company.
The proposed federal rule would increase predictability and stability for employers because they won't have to deal with a patchwork of state laws that constantly change, said Karuna Patel, an attorney advisor in the FTC's Office of Policy Planning.
In addition, "it should become easier to find talent, talent that has been locked up by noncompetes to date," she said.
The proposed rule...
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