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5 things workers should know about the new federal ban on noncompete agreements
Employment prospects just got brighter for the estimated 30 million U.S. workers who are currently bound by so-called noncompete agreements. U.S. regulators on Tuesday banned nearly all noncompetes, which restrict about 1 in 5 employees around the U.S.
Here are five things to know about what the Federal Trade Commission rule means for workers.
What the rule states
- Noncompetes are an unfair means of competition, and so employers are prohibited from entering into any new such arrangements with workers. Employers will no longer be able to enforce existing noncompetes, other than with senior executives, which the rule defines as someone earning more than $151,164 per year and in a “policy-making position.”
- Employers are required to notify workers with noncompetes that they are no longer enforceable.
- Noncompetes are allowed between the seller and buyer of a business.
When the rule takes effect
The rule takes effect 120 days from the time it is published in the Federal Register, the official daily publication for rules, proposed rules, and notices of federal agencies and organizations, as well as executive orders. The FTC submits the rule, follows the procedures and waits for publication to happen, with the exact timing up to the Federal Register.
The reasons behind the FTC’s decision
- Noncompete agreements can restrict workers from leaving for a better job or starting their own business.
- Noncompetes often effectively coerce workers into staying in jobs they want to leave, and even force them to leave a profession or relocate.
- Noncompetes can prevent workers from accepting higher-paying jobs, and even curtail the pay of workers not subject to them directly.
- Of the more than 26,000 comments received by the FTC, more than 25,000 supported banning noncompetes.
Why many health care workers may be exempt
Nonprofits typically fall outside the FTC’s jurisdiction, meaning the noncompete ban may not apply to many of the nation’s health care provider organizations.
As many as 45% of physicians are restricted by noncompetes, according to the American Medical Association, which has voiced support for banning most of them.
What happens next
In voting against passage of the rule, the two Republican FTC commissioners on the five-person panel argued that the agency lacks the authority to ban noncompetes. The same case is being made by the U.S. Chamber of Commerce, which filed suit against the FTC on Wednesday.
The legal challenges are viewed as a credible threat, meaning a case could end up in the U.S. Supreme Court, where conservative justices have a majority.
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If you’re tired of making monthly credit card payments only to see minimal reductions in your balances then you may be looking into debt relief options. Credit card debt forgiveness is one to consider.
Debt forgiveness companies aim to help you save money and get out of debt faster through negotiations. If those negotiations are successful, your credit card companies may forgive a percentage of your balances, which could provide the relief you’re looking for.
But, like all debt relief options, credit card debt forgiveness isn’t a one-size-fits-all solution. So, what are some signs that credit card debt forgiveness may not work for you? That’s what we will detail below.
Let a debt relief expert help you put your credit card debt behind you now.
4 signs credit card debt forgiveness may not work for you
While credit card debt forgiveness programs are a good fit for some borrowers, they aren’t perfect for everyone. Here are a few signs that credit card debt forgiveness may not work for you:
You always make your payments on time
Credit card debt forgiveness is typically designed for borrowers who can’t consistently make minimum payments. So, if you make your credit card payments on time, every time, that may be a sign that these programs aren’t a good fit for you.
There are a wide range of debt relief options. And, credit card debt forgiveness is a more extreme option that can come with more significant repercussions than others. So, if you can afford to make your monthly payments on time – even if it’s not always comfortable – other debt relief solutions may be a better fit.
Find alternatives to credit card debt settlement here.
You don’t have enough credit card debt
Most credit card debt forgiveness companies require minimum debt amounts to qualify for their services. For example, you’ll need at least $10,000 in credit card debt to qualify for the services Accredited Debt Relief provides and Freedom Debt Relief and National Debt Relief both impose $7,500 minimums. If you have under $7,500 in credit card debt, you may be hard-pressed to find a service provider to work with.
You already have a judgment
If you forego payments to your credit card companies for too long, they may sue you for the money you owe. And, if your credit card companies sell your debt to a debt collector, that collector may take you to court, too.
If you lose the case, your credit card companies, or the debt collectors they’ve sold your debt to, may win judgments against you. Those judgments can give them leverage, making them less likely to negotiate what you owe. While you may be able to settle a debt following a judgment against you, doing so may be more difficult. So, if you already have one or more judgments against you and can’t afford to pay the debt back, bankruptcy may be a better option.
You’re considering a large purchase
Credit card debt forgiveness may not be your best debt relief option if you want to make a large purchase, like a home or car. That’s because these solutions can harm your credit score, making it difficult to access new loans.
“Asking for payment relief or debt forgiveness should be given serious consideration prior to taking action,” explains Michael Broughton, founder and CEO of the credit-building app, ALTRO. “Once you request a change to terms or a lower payment, your credit could be impacted and the chances that you will be able to get loans for other, unrelated items can be severely diminished.”
The bottom line
Credit card debt forgiveness is a fitting solution for many people – especially if they can’t afford their minimum payments. But, it’s not the best fit for everyone. You may want to consider other options if you always make your payments on time, don’t have enough credit card debt, already have judgments against you or you’re in the market for a large purchase. Chat with an expert about your debt relief options now.
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