Could FTC also Ban "Functional Non-Compete" Agreements?
While a traditional non-compete clause falls squarely in the “prohibits” category, the FTC also expressed concern regarding other agreements that may “function to prevent workers from seeking or accepting other work or starting a business after their employment ends.” As a result, employers should consider reviewing other employee agreements and prepare for the possibility that the FTC may attempt to bar those “functional non-compete” agreements in the future. For example, many employers reimburse employees’ tuition fees or training costs to encourage employees to seek further work-related education or training. In such cases, the employees are often required to remain employed for a certain period of time after they receive reimbursement. If they leave before that time period ends, employers reserve the right to deduct the cost or a percentage of the cost from the employee’s final paycheck. In its commentary on the non-compete rule, the FTC found that some “training repayment agr...