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The FTC’s ban on noncompete clauses could be good for startups. But it also might be struck down.
The FTC's ban on noncompetes could help ease hiring for startups but it's unclear that the ban will hold up in court.
Banning noncompete agreements could also encourage startups to foster a strong company culture that makes people want to stay, as opposed to using threats to keep them, Cromydas said. Understandably, some startup CEOs are worried about how the end of noncompetes could impact the security of intellectual property, but Cromydas said there are other ways for companies to protect themselves. “Even without this ban, it is really, really hard in virtually every court in America to enforce a noncompete unless you have something added that are bad facts like theft of confidential information, soliciting customers before you go, trying to set up competing business before you go,” Vann said.
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