By Samantha Bartlett
In January, the Federal Trade Commission (FTC), stating that noncompete agreements are “a widespread and often exploitative practice that suppresses wages, hampers innovation and block entrepreneurs from starting new businesses,” issued a proposal to ban noncompete agreements. The proposal would stop employers from requiring noncompete agreements with their workers and would require employers to rescind existing non-compete agreements. A public comment period was open through March 20.
Many associate veterinarians have shared stories of how non-compete clauses have trapped them in less-than-ideal work situations and restricted their power to improve their work environment. Some opponents of noncompetes argue that they are contributing to veterinary shortages by keeping veterinarians out of the market. Independent practice owners argue that without noncompete clauses, associates can leave and take clients with them.
The FTC has suggested that nondisclosure agreements are perhaps a better approach to keeping proprietary information within the company. Examples of companies that do not have noncompete policies are Veterinary Emergency Group (VEG) and Petco/Vetco. VEG initially had a noncompete, but discontinued the practice in 2021. They instead have a business protection agreement that protects the company from an employee copying their marketing or using their name on another clinic. It does not however restrict employees to going to a new job of their choosing. Petco states they have never required a noncompete from their employees.
Several states have banned or restricted the use of noncompetes already. California, North Dakota and Oklahoma have banned noncompetes entirely. Massachusetts bans noncompetes for physicians, nurses, psychologists and social workers and is reviewing a bill that would add veterinarians to the list. Colorado, Illinois, Maine, Maryland, New Hampshire, Rhode Island, Oregon, Virginia and Washington have restrictions on noncompetes based on salary.
Once the FDA decides whether to proceed with the ruling, it will go into effect 180 days after publishing in the Federal Register. It is anticipated that any ruling against noncompetes will undergo legal challenges.
