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FTC’s Proposed Noncompete Ban Will Be Watched Closely by the Real Estate Industry

The Federal Trade Commission has made waves with a proposed rule that would ban noncompete clauses across the board in the U.S. workforce. Such a ban could have a big impact on the commercial real estate industry. The most significant change would be freeing up brokers to jump ship to competitors more easily, which has been contested in some high-profile court cases in recent years involving firms like Cushman & Wakefield, Newmark, CBRE, and JLL.

Noncompete clauses are used frequently by commercial brokerages today to keep top brokers from leaving and protecting client rolls and trade secrets. Executive real estate professionals usually find workarounds for noncompetes, taking extended time off between jobs to comply with the stricter clauses. Early career employees usually don’t have the same luxury, and noncompetes can be like “handcuffs” for career mobility.

FTC’s proposed rule is months from going into effect, and the rule would almost certainly face a court challenge. A ban on noncompetes would benefit real estate employees and may somewhat hamper brokerages from retaining top producers. But it could also positively impact the real estate industry as a whole by helping it retain more people instead of them leaving for another industry. The proposed ban is a developing story that will be monitored closely by the real estate industry in the coming months.

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