FTC Ban on Noncompete Agreements: Talent Implications for Energy and Commodities

The US Federal Trade Commission (FTC) has announced a ban on noncompete agreements, with potentially significant implications for commodities organisations and talent. 

With proprietary datasets and technology widespread - particularly across trading - noncompetes are common in the sector. What could the FTC’s ruling mean for talent – and for employers?

Noncompetes are legal agreements – typically a clause in a contract – that require employees not to compete with an employer after they have moved roles. In practice this can prevent some employees from taking up new positions at rival companies, or delay the start of new contracts, although the rules are not always strictly enforced. 

The new ruling could become law by autumn 2024, although legal challenges could delay its implementation. So how could the changes impact the sector in the US?

Increased Mobility

Workers in the commodities sector will gain more options to explore job opportunities with different companies when noncompetes are lifted. This could shift recruitment market dynamics: greater fluidity will be injected into the job market as employees seek better offers elsewhere.

Talent Acquisition Challenges

Likewise, companies may face challenges in retaining top talent if employees are no longer bound by noncompetes. This could result in heightened competition among companies to attract and retain skilled workers. This could potentially drive up recruitment costs.

Innovation and Competition

With fewer constraints on job movement, there may be an increase in competition within the commodities sector, according to the FTC. As well as offering more competitive compensation packages to retain skilled workers, companies may also adopt innovative new policies to make them more attractive employers - for example by enhancing flexible working offers.

Legal Compliance

Companies operating in the commodities sector will need to ensure compliance with the new FTC rule and adjust their hiring practices accordingly. This will include reviewing and revising existing employment contracts to remove noncompete clauses, as well as creating and implementing new strategies for employee retention.

Overall, while the scale of the impact for market dynamics in commodities remains to be seen, the changes are likely to be felt on several fronts. Participants in the sector may need to adapt their recruitment strategies to navigate these changes effectively.