Employees have always had a variety of reasons for wanting to change jobs, though generally people seek new opportunities to better themselves in one way or another. In the current labor market, even despite some legal technology and legal services companies downsizing, the unemployment rate remains very low, and there are more job openings than candidates to fill them. This is good news for people looking for new work.

For some, leaving an unsatisfying job is as easy as reaching out to a few people in their network or returning a recruiter’s call. But for others, it’s not that simple. Sales professionals along with others in key positions are often bound by strict noncompete clauses that prevent them from moving on to a better opportunity. About 20% of employees in this country are subject to noncompete clauses in their current employment agreements, including many working in the legal industry.

When starting a new position, we’re generally excited to begin a new chapter and aren’t looking ahead to when it might end. Consequently, people don’t think twice about signing an agreement as a condition of their employment even if it includes a noncompete clause. When they do pause or attempt to negotiate the agreement, most sign it anyway once it’s determined the pros outweigh the cons

Companies require sales professionals and sometimes others to sign noncompete agreements because they want to protect themselves from having their best employees poached by competitors, or in some cases, they have valid concerns about exposure of trade secrets. But an unintended consequence of those iron-clad agreements is having employees who stay in their positions long past the time they should have progressed to a new job. Those restricted from joining another company or even starting their own business because their current employment agreement prohibits them from doing so remain stuck in positions they don’t want. They no longer thrive, no longer produce and are generally no longer happy – all of which can have damaging effects on the company that’s preventing them from moving on.

Those who leave an unwanted job when they’re bound by a strict noncompete clause may find prospective new employers are uninterested in hiring them, as they don’t want to risk their new employee being tied up in legal action. That can leave job seekers having to settle for a position for which they’re overqualified or outside of their interest area just so they can move on.

Yet despite their drawbacks, noncompete clauses remain common in employment agreements throughout the legal industry. But that may be changing.

Earlier this month, the Federal Trade Commission proposed a new regulation related to noncompete clauses. If passed, the rule will significantly change employment agreements in the United States by prohibiting the forced signing of noncompete clauses that threaten legal action should the employee leave the company to start their own business or join a competitor. The FTC argues that noncompetes suppress wages, restrain new business formation and hurt the ability of companies to hire workers they need to grow.

While the proposed new rule will likely face opposition from the business community, if it goes into effect the regulation is expected to impact the U.S. economy with greater competition among businesses that will lead to high wages and improved working conditions for employees.

At Celeritas, we’ll be keeping a close eye on this FTC proposal as it will affect candidates pursuing new opportunities in the legal industry.

-Chris Egan