Hello, LOs!
On July 9, President Joe Biden signed an executive order calling on the Federal Trade Commission to enact a rule that eliminates or limits an employer's use of a noncompete agreement.
Such agreements are quite common in white collar jobs, but they also limit the movement of employees in the construction and hotel industries. Even fast food workers have been affected.
According to the White House, half of U.S. employers require at least some of their workers to sign noncompetes. More than 30 million Americans are believed to be working under the agreements.
HousingWire Mortgage Reporter Maria Volkova – who joined us this week following 1.5 years at Inside Mortgage Finance – is reporting on how a new rule on noncompetes might affect the mortgage industry.
Industry insiders, LOs and attorneys told Volkova that noncompetes have in the past prevented some LOs from switching jobs or starting their own mortgage company, though they said the majority have been able to move freely.
The ban of noncompetes, however, would likely set marketing staffers, account executives, press relations personnel and others free to pursue different opportunities without fear of legal action, said Krysta Betanzos, a labor attorney at Garris Horn LLP.
"The FTC is trying to prevent a wholesale use of noncompetes that aren't trying to prevent what noncompetes were meant to do," she said. "This is exactly what the order is trying to prevent or limit the use of."
To date, noncompetes have largely been dealt with on a statewide basis. Some states, like California, Oklahoma and North Dakota, ban them altogether. About a dozen others prohibit their use with low wage workers. Other states are friendlier toward management.
Have you been subject to a noncompete agreement by a lender? If so, has it limited your ability to get a new job? If you're on the management side, does a weakening or elimination of noncompetes remove a tool in preserving client relationships or intellectual property?
We'd love to hear from you. Please email Maria Volkova anonymously at mvolkova@housingwire.com.
James Kleimann
Managing Editor, HousingWire
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