What could a ban on noncompete agreements mean for Wisconsin workers?

 

MADISON Wis. (CBS 58) -- After federal regulators voted to outlaw most noncompete agreements for millions of workers, business leaders in Wisconsin are keeping tabs on how it could potentially impact the workforce.

The Federal Trade Commission on Tuesday voted 3-to-2 to approve the new rule hat could led to sweeping changes across many industries, but there's a big "if" as to whether noncompete agreements will be illegal with a new high stakes legal battle underway.

Aaron Halstead, an attorney at Hawks Quindel in Madison, represents many clients who are trying to get out of their noncompete contracts. Halstead predicts if the FTC rule takes effect, it would be a "big win" for workers.

"The idea is you should let people move to positions that better them if the person wants to hire them," Halstead said.

After practicing for 34 years, Halstead said he's never seen something to this magnitude challenging a clause that prevents many workers from switching jobs to work for competitors or starting their own business.

"It's something that's a huge movement and I think it's likely to take hold in other ways at the state level potentially," said Halstead.

Under the FTC proposed rule, for-profit employers would be banned from creating new noncompete agreements and require companies to let current and former employees know they can't enforce them.

An estimated 30 million Americans are bound to noncompete agreements, or roughly one in five workers, according to the FTC.

Less than 24 hours after the FTC voted to outlaw them, the U.S. Chamber of Commerce sued seeking to delay enforcement -- a move that could prevent it from ever taking effect.

Still, the possibility has many business leaders in Wisconsin worried.

"I think there are some legitimate concerns," said Eric Borgerding, President & CEO of the Wisconsin Hospital Association. "When employers invest a lot of time, money and effort into developing an employee and then they just go compete with another employer, that's not fair."

Sarach Coyne, a health law attorney at Quarles and Brady, believes if the rule is enforced, it wouldn't impact most hospitals in Wisconsin because the FTC rules do not apply to non-profit companies.

However, there's still a sizable share of physicians between 37% and 45% who are impacted by noncompetes, according to the American Medical Association.

Critics believe noncompetes could hamper an already fractured health care industry and lead workers to leave the profession or relocate.

The debate over noncompete agreements has divided many with labor advocates celebrating the decision while angering business leaders.

It also could have a significant impact on a wide variety of industries beyond health care, including technology, hairstyling, journalism, and others.

For now, many business leaders are taking a "wait and see" approach given the issue is almost certain to land before the U.S. Supreme Court.

And even if the issue is tied up in the courts, states and local governments could pursue similar restrictions. There are also bipartisan proposals in Congress seeking to ban the practice.