What the FTC Non-Compete Ruling Means for Your Employee Benefits

Apr 26, 2024

Following the Federal Trade Commission’s (FTC) recent ruling on non-compete agreements, businesses across various industries are bracing for significant changes. With the impending ban on post-employment non-compete agreements, employers are faced with new challenges in retaining key talent. This ruling underscores the critical importance of enhancing employee benefits packages as a strategic tool for retention.

Overview of the FTC Non-Compete Ruling:

The FTC’s ruling seeks to eliminate almost all post-employment non-compete agreements, effective 120 days after publication in the Federal Register. However, if a lawsuit is filed by a trade association or a business, the timeline could be extended. Currently the U.S. Chamber has already promised to sue the FTC to block the rule from taking effect because, according to its President and CEO, Suzanne Clark, it’s a “blatant power grab that will undermine American businesses.”

Below is a breakdown of the Final Rule:

  • Only existing agreements for senior executives (earning over $151,164 annually) are exempted
  • The ruling impacts a wide range of industries and levels of employment, including the healthcare sector
  • It prohibits nearly all new post-employment non-compete agreements
  • Companies must notify employees that existing non-competes are no longer enforceable
  • Rule does not apply to franchisee/franchisor relationships, and exempts agreements related to the sale of a business

The Challenge of Retention:

With non-compete agreements no longer acting as a barrier to employee mobility, businesses face a heightened risk of talent attrition. Studies have shown that 77% of employees are more likely to stay with a company that provides a comprehensive benefits package. Considering the new FTC ruling, the need to prioritize employee benefits for retention has become more critical than ever before.

Leveraging Benefits for Retention in Light of FTC-Non Compete Ruling:

In response to the ruling, now is the time for organizations to proactively review their benefits packages and identify opportunities for enhancements. To do this, we recommend employers:

1. Focus on Quality:

Providing quality benefits is essential for attracting and retaining talent. Quality care not only enhances employee satisfaction but also contributes to overall well-being and productivity. 

A recent Totem case study demonstrates the tangible ROI of prioritizing quality care in employee benefits packages, emphasizing its value as a retention strategy.


In addition to substantial savings for the employee (see table above) — the employer highlighted in the study received an estimated 3.4x return on investment by partnering with Totem and prioritizing quality care in their employee benefits package. 

An emphasis on quality care not only benefits your employees — but also impacts your bottom line.

2. Get Serious About Communication:

Effective communication is key to maximizing the value of employee benefits and ensuring your employees understand the full range of benefits offered to them.

The Totem Benefits Service Center covers not only inbound calls and email messages but also serves as an optimal employee communication tool leveraging outbound communication support, such as call and text campaigns. The Benefits Service Center keeps employees up-to-date, engaged, and informed based on your organization’s initiatives and objectives.

According to a survey conducted by Gallup, organizations with highly engaged employees experience 81% lower absenteeism and 14% higher productivity. Transparent, engaging, and proactive communication is the key to building trust and reinforcing the employer-employee relationship, thereby enhancing retention efforts.

To maximize the effectiveness of outbound employee communication, we always recommend adopting a multichannel approach. Leveraging various channels such as email, text messages, benefits websites and call centers ensures that messages reach employees through their preferred mediums.

3. Consider Creative Benefit Solutions:

Employers can explore creative solutions, such as eligibility based on tenure, to incentivize employee loyalty. 

“This practice may improve employee retention and reduce turnover by recognizing and rewarding employees’ experience and loyalty to a company. An employer may realize cost savings by offering less expensive benefits to new employees and more robust benefits to long-term employees. This strategy might prove especially effective in high-turnover industries. Loyalty and company-specific experience can be valuable employee characteristics to an organization.” — Johnny C. Taylor Jr., CEO of SHRM

At Totem, we create customized employee benefits plans because we know that customization is essential to employee satisfaction and wellbeing. Here are just a few ways we can create custom plans:

  • Data-Driven Decision Making: Totem uses data to uncover insights into employee preferences and health trends. We work with employers to use analytics to inform their benefits decisions. 
  • Employee-Centric Approach: We gather employee input and feedback, and advocate for a collaborative approach in co-creating benefits plans.
  • Flexibility: Totem offers a range of benefit options that employees can opt into based on their unique set of needs (like stipends, commuter benefits, and caregiver benefits.)
  • Emphasizing Quality Care: We find that better preventive care leads to reduced long-term healthcare costs for both employers and employees.
  • Wellness Programs: Tailoring wellness programs to employees leaves a lasting impact on employee health and satisfaction.

As businesses navigate the implications of the FTC ruling on non-compete agreements, the role of employee benefits in retention has never been more crucial. By prioritizing quality, communication, and innovative benefit solutions, employers have the tools to adapt and retain their most valuable asset—their talent.

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