US bans ‘non-compete’ clauses in employment contracts

And (parts of) the gaming industry is rejoicing.

So-called “non-compete clauses” are quite common in American employment contracts, and mean, somewhat simplified, that a former employee may not engage in activities that can be considered to compete with his former employer for a certain period after termination. This naturally causes problems in, among other things, the game industry, where game developers may have to wait before they can take a new job in the industry or start their own studio, which is not always financially possible.

But now the country’s counterpart to the Competition and Consumer Authority, the Federal Trade Commission (FTC), has decided that these clauses should be banned, both for future contracts and retroactively, with senior managers as the only exception. The new rule is to take effect 120 days after it is published in the Federal Register.

One who applauds the decision is developer Aaron San Filippo, who believes it will result in many more indie games from former AAA developers.