What does the proposed ban on incomplete clauses mean for senior advisor

Ted Jenkin signed a non-compete agreement when he sold his financial advisory practice in 2019.

Source: Ted Jenkin

When certified financial planner Ted Jenkin sold his financial advisory practice in 2019, he signed a non-compulsory, incomplete agreement that forbade him from taking clients from the firm for five years — or from taking any other job in the industry, anywhere in the country.

“When you sell a company, you’re pretty much selling customers or ideas, but your inability to do the work in that business makes no practical sense whatsoever,” he said. “It’s crazy.”

Bound by this condition, Jenkin, who is a member of CNBC’s Financial Advisor BoardHe remained an employee until the end of last year.

“Now I can abide by the contract or do something in the industry and we will have a legal battle,” he said.

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That is, unless a federal regulatory agency has its way.

Recently, the US Federal Trade Commission Suggest a new rule Banning the use of incomplete clauses in employee contracts in nearly all areas, the agency said, because they reduce wages, hinder innovation and prevent entrepreneurs from starting new businesses.

The proposed rule would require companies with incomplete existing agreements to cancel them and report them to current and former employees cancelledIn this case, Jenkin will be free to continue other work.

“I will be the first person to start working again,” Jenkin said. “I will not be afraid to get into a legal battle just because I am in my profession.”

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Nearly one-fifth of American workers sign a “non-compete”

Noncompetitive materials are widely used in industries like finance, but also, increasingly, in many other professions as well, according to the Federal Trade Commission, “from hairdressers and warehouse workers to doctors and business managers.”

There’s often little wiggle room: Less than 10% of workers have any ability to negotiate these clauses, and 93% of them read and sign them anyway, according to the National Labor Code Bill.

appreciate it more More than 30 million workers – or roughly 18% of the American workforce – are bound by such agreements.

“Non-skills are preventing workers from switching jobs freely, denying them higher wages and better working conditions, and denying companies the talent pool they need to build and expand,” FTC Chair Lena Khan said in a statement.

If the practice is stopped, wages could increase by about $300 billion annually, according to the Federal Trade Commission.

Imperfect agreements are an important tool.

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