The FTC has a proposed rule making that would ban noncompetes. This is interesting as bankers, particularly senior ones may see Garden Leave become a thing of the past, but I wonder if they’ll now go to something like a nonsolicit instead. I think it’s also problematic if a seller can now go and directly compete after selling their business.
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I don't see a problem with Non-competes if you are being compensated for the time that you are not allowed to "compete". However, I think at the junior level they are overkill.
I think it’s more of an issue for M&A. How do you prevent the former CEO from going and opening up if you can’t enforce a noncompete?
I think they are ridiculous especially in medicine where I’ve seen 30 miles from “any owned facility”, if it’s a large health system that may be massive and the only way out is mid five to six figure litigation cost to find out if it’s overly restrictive. In banking a non-solicit to existing clients may be more appropriate.
I still think the correct answer is properly adjusted compensation. Whether that is achieved through earnouts, some sort of retainer, retaining management, etc. The way I see it if you keep a CEO busy and well compensated, then they will not go start competing practices.
First of all, the proposal is to ban non-compete for employees so it wouldn't apply to business sellers and buyers would still have the option to compel sellers to sign a non-compete.
A gardening leave is not a non-compete, but an obligation to give a longer notice period. While it's customary for the employee to stop perfomrning their duties during the leave, technically the company can require you to work throughout your leave (it happened to a friend of mine who had made lots of travel plan, he wasn't happy...). Now we can all agree that a long notice period / gardening leave does reduce your attractiveness to a new employer, but my quick read of the link suggest gardening leaves would still be acceptable under the proposal rules changes.
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