PINELLAS COUNTY, Fla. — An estimated 30 million Americans are expected to be impacted by an announcement made this week by the Federal Trade Commission. Soon, non-compete agreements will be banned across the country.
Non-compete agreements prevent people from working at another company within a specified area for a specified amount of time.
"They are very enforceable, and they're a real problem for Florida employees," shared Ryan Barack, a board-certified labor and employment attorney based in Clearwater.
The FTC's nationwide ban on noncompetes takes effect in four months — though court challenges are expected — impacting all industries that currently use them. Some of those careers include jobs in medicine, tech, journalism and cosmetology.
It's a decision that can change people's careers and wages. The FTC estimates that banning noncompetes will result in:
- Reduced health care costs: $74-$194 billion in reduced spending on physician services over the next decade.
- New business formation: 2.7% increase in the rate of new firm formation, resulting in over 8,500 additional new businesses created each year.
- Rise in innovation: an average of 17,000-29,000 more patents each year for the next ten years.
- This reflects an estimated increase of about 3,000 to 5,000 new patents in the first year noncompetes are banned, rising to about 30,000-53,000 in the 10th year.
- This represents an estimated increase of 11-19% annually over a 10-year period.
- Higher worker earnings: $400-$488 billion in increased wages for workers over the next decade.
- The average worker’s earnings will rise an estimated extra $524 per year.
Right now, with non-competes still legal in the Sunshine State, Barack said it's an issue people can lose their jobs over.
"They could say, 'If you don't sign this non-compete agreement, you're fired.' And that would be an enforceable basis for a non-compete in Florida," Barack explained.
Barack said the impacts of this ban are massive. It could create opportunities for new businesses, better work environments and better pay.
"I would say it's a game changer for employees in Florida and will have a real impact on wages, a dramatic impact on wages," he said.
In the Tampa Bay area, there are plenty of people who have seen the impacts a non-compete can have on their career opportunities.
"So I definitely believe that it is a scare tactic to make you not want to leave once you've started," Kelly Edna shared.
Edna is the owner and stylist at The Chair Salon Studio in St. Petersburg. She said a non-compete nearly upended her chances of owning her own business.
"When I went to leave [my previous employer], I opened my salon, and about two months later, I got a cease and desist that says I had a breach of contract when I signed the thing," she said.
Edna said she was told by the company she was not allowed to do hair within 20 miles of either of the salon's locations for two years. One was in Clearwater, the other in St. Pete.
"So that's the whole Pinellas County. Some of Hillsborough and Pasco," she said.
Edna said she lawyered up and fortunately didn't hear back from her previous employer again. If her non-compete was upheld, she said she likely would have had to move counties and start from scratch.
"Yeah, so when I started, I invested a lot of money into, my space, all the furniture, all the equipment, all the color. And, I mean, it was thousands of dollars that I could have lost potentially because they were enforcing this," she shared.
Existing non-competes for senior executives making more than $151K are exempt from the ban.
Malique Rankin is a general assignment reporter with 10 Tampa Bay. You can email her story ideas at mrankin@10tampabay.com and follow her Facebook, Twitter, and Instagram pages.