The FTC recently proposed banning non-compete clauses in employment agreements to increase competition and provide career fluidity. The rule would end the practice, retract existing non-competes, and prohibit indicating that anyone is or may be subject to one. Stay clauses for a business sale are exempted. The federal rule would supersede all local rules.
Is this an issue in our industry? CNBC reports that about 30M Americans are bound by non-competes, including 15% without a college degree and 14% earning less than $40k/yr.
Along with increased autonomy, proponents cite that executives have greater flexibility in circumventing non-competes. Employers will undoubtedly point to resultant cost increases. Some estimate that salaries will rise by $300B. The Bureau of Economic Analysis recorded nearly $10T in 2020 salaries, making this a 3% impact. CNBC suggests that if confirmed, the ruling will be trimmed.
The legal profession has historically crafted employment terms to protect the hiring company. The American Veterinary Law Association suggests that veterinarians’ best approach is to stipulate non-solicitation. Dr. Lance M. Roasa, a director at AVMLA, points to geographic and chronological constraints as the most reasonable, practical, and enforceable. Still, for the entire industry from those in the clinic to those serving and supplying them, the current tapestry of local rules draws intensive attention to this issue. Given the corporatization and shortage of veterinarians and the relatively small animal health industry, this FTC proposal will impact our industry.