Strategies for Recruiting Immigration Talent In Light of FTC Non-Compete Clause

On April 23, 2024 the Federal Trade Commission announced a final rule that will effect non-compete agreements moving forward. With nearly one in five Americans (estimated 30 million total or 18% of the U.S. workforce) subject to a non-compete clauses, the final rule will cause disruptions to many employers but pave the way for increased innovation, new business growth and flexibility for workers.

Under the FTC’s new rule, existing non-competes for the vast majority of workers will no longer be enforceable after the rule’s effective date. Existing non-competes for senior executives – who represent less than 0.75% of workers – can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives. Employers will be required to provide notice to workers other than senior executives who are bound by an existing non-compete that they will not be enforcing any non-competes against them.

How the Ban Benefits Immigrant Workers

“Non-compete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” said FTC Chair Lina M. Khan.

Data shows that foreign workers in highly skilled industries like technology also tend to be directly impacted by non-compete clauses so this change will create new job opportunities that wouldn’t have been possible otherwise. How so? The new FTC rule will create more freedom and financial opportunities for immigrant workers to move between employers since they won’t be prohibited from working for “competitor” companies during or after their current employment.

“These contracts typically restrict workers through time, industry, and/or geography. A time restriction prevents someone from working for a competitor for a defined period of time after leaving a position; a geographic restriction may restrict someone from accepting work in entire regions of the United States; and an industry restriction can prevent a worker from working for a particular type of company. Sometimes, non-competes prevent workers from starting their own competitor companies.” Source

How Non-Compete Clauses Negatively Affect Employees

Below are just a few of the ways non-compete clauses impact workers:

• Restrict job mobility
• Suppress wagers
• Lower job satisfaction
• Result in monetary penalties
• Difficult to challenge

The initial proposed rule in January was accompanied by a 90-day period where the public could submit their comments and thoughts. The agency received over 25,000 comments supporting the ban on non-competes. In the final ruling, the FTC concluded that non-compete clauses are “an unfair method of competition, and therefore a violation of Section 5 of the FTC Act, for employers to enter into noncompetes with workers and to enforce certain noncompetes.”

How HR Professionals Can Attract Foreign-Skilled Workers

With all these legal changes, it’s important for HR professionals to be aware of the impact that it has on recruiting foreign talent. HR professionals can engage foreign workers in the following ways:

• Highlight Competitive Benefits and Compensation Packages: This can include not only the position’s salary but any additional perks like relocation support, family/immigration benefits, paths towards permanent residency, etc.
• Develop Strategies for Retaining Workers: A dedicated employee is invaluable to an organization, and the sooner employers realize this, the better off everyone is. Happy employees positively impact the work culture and environment so make sure there are measures in place to reward and incentivize them to stay.
• Make Long-Term Immigration Options Seamless: Above all, immigrants need to feel like their transition to the United States is fully transparent and seamless. It’s important for recruiters to know the latest immigration regulations so they can guide the immigrant talent on their journey to the U.S.  Both employers and employees are advised to consult a qualified immigration attorney during and after the recruitment process to ensure all their documents are in order.