The FTC’ s final non-compete rule marks a new era for employee mobility and innovation, with a comprehensive ban on new non-compete for all workers including for senior executives and making existing non-competes unenforceable for those non deemed a senior executive. This pivotal change is set to go into effect on September 4 2024, and is poised to significantly impact the Medtech industry. Within this blog article, Tanya Ridding takes you through things you should know surrounding the rule, preparing yourself & your business, and how we can help.
What you should know:
- Almost 20% of US workers are currently bound by non-compete agreements (NCA)
- Up to 98% of private employers currently require both executives and managers to sign non-compete agreements at the start of their current role
- The ban could increase average earning among all workers by between 3.2% – 14.2% (between $400 – $488 billion over the next decade)
- It is estimated there will be increase of up to 2.7% in new firm formation, equating to roughly 8,5000 new businesses annually
- An estimated 17,000 – 29,000 additional patients are expected to be files each year
- The ban may also prompt employers to hire more experienced, more skilled and more diverse workers, enhancing industry mobility
- The FTC Rule is not just a policy change; it’s a catalyst for a more dynamic labour market and a more innovative economy
Prepare yourself and your business:
- The rule is due to go live on September 4 2024, but delays are possible. Existing non competes are enforceable under state law until then
- Identify which workers will need notice if the rule goes into effect and plan to provide this notice, communicating clearly, following the FTC’s model
- Be mindful that non-competes with Senior Executives, ($151K+ in policy-making positions) will remain enforceable
- Monitor litigation outcomes that may affect the rule’s effective date
- Explore alternative agreements such as NDAs, non-solicitation agreements and IP agreements to protect business interests
- Invest in employees, providing ongoing training and career development to retain your best talent
- Create a company culture that is supportive and inclusive, recognizing contributions and making employees feel valued and aligned with your company mission
- Provide enhanced employee benefits including competitive salaries, health programs, incentives and flexible working conditions to aid retention
- Consider utilizing garden leave clauses during employee notice periods, dependent upon seniority
- Ensure that you use exit interviews to remind departing employees of their obligation regarding confidential information and solicitation
With that in mind, and with recent statistics also showing that the labour markets in advanced economies are already tighter than they’ve been in two decades, with more vacancies than skilled unemployed workers, the quest for top talent is paramount.
In the post-non-compete era, how can an Executive Recruiter help?
Expertise & networks:
The ban will disrupt traditional talent acquisition strategies. We specialize in identifying and attracting top talent with extensive networks spanning industries, geographies, and functions to give you a broader pool of candidates, especially when NCs are no longer enforceable.
We specialize in identifying and attracting top talent with extensive networks spanning industries, geographies, and functions to give you a broader pool of candidates, especially when NCs are no longer enforceable.
Time efficiency and strategic focus:
The time of business leaders is precious. We can allow you to focus on strategic priorities while we handle the intricate search process to ensure efficiency, timely hires and a competitive advantage in a difficult market.
Objective evaluation & unbiased perspective:
The wrong hire can be costly – up to 2x estimated salary and now could also cost you insider information and insights. We evaluate candidate objectively based on competencies, cultural fit and potential, to reduce the risk of post-hire regrets.
Confidentiality and reputation management:
Leadership changes demand discretion. We maintain confidentiality to safeguard your company reputation during executive searches. When NCs are no longer enforceable, protecting trade secrets and client relationships becomes even more critical.
Industry insights & talent acquisition strategies:
We reach talent from all sectors and backgrounds to gain insights which guide effective TA strategies; salary bench-marking, emerging talent pools and changing market trends.
Succession planning & retaining top talent:
Economic uncertainties increase the risk of unexpected departures. We can help you create succession plans for top talent whilst mapping out contingencies with talent that may not have been available prior to the ban.
Are you a medical device company looking for talent? Or maybe you’d like to learn more about our recruitment services? Head over to my specialist executive search page to learn how our medical device experts can support your growth.
