#noncompete

Federal regulators on Tuesday [April 23, 2024] enacted a nationwide ban on new noncompete agreements, which keep millions of Americans — from minimum-wage earners to CEOs — from switching jobs within their industries.

The Federal Trade Commission on Tuesday afternoon voted 3-to-2 to approve the new rule, which will ban noncompetes for all workers when the regulations take effect in 120 days [So, the ban starts in early September, 2024!]. For senior executives, existing noncompetes can remain in force. For all other employees, existing noncompetes are not enforceable.

[That's right: if you're currently under a noncompete agreement, it's completely invalid as of September 2024! You're free!!]

The antitrust and consumer protection agency heard from thousands of people who said they had been harmed by noncompetes, illustrating how the agreements are "robbing people of their economic liberty," FTC Chair Lina Khan said. 

The FTC commissioners voted along party lines, with its two Republicans arguing the agency lacked the jurisdiction to enact the rule and that such moves should be made in Congress...

Why it matters

The new rule could impact tens of millions of workers, said Heidi Shierholz, a labor economist and president of the Economic Policy Institute, a left-leaning think tank. 

"For nonunion workers, the only leverage they have is their ability to quit their job," Shierholz told CBS MoneyWatch. "Noncompetes don't just stop you from taking a job — they stop you from starting your own business."

Since proposing the new rule, the FTC has received more than 26,000 public comments on the regulations. The final rule adopted "would generally prevent most employers from using noncompete clauses," the FTC said in a statement.

The agency's action comes more than two years after President Biden directed the agency to "curtail the unfair use" of noncompetes, under which employees effectively sign away future work opportunities in their industry as a condition of keeping their current job. The president's executive order urged the FTC to target such labor restrictions and others that improperly constrain employees from seeking work.

"The freedom to change jobs is core to economic liberty and to a competitive, thriving economy," Khan said in a statement making the case for axing noncompetes. "Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand."

Real-life consequences

In laying out its rationale for banishing noncompetes from the labor landscape, the FTC offered real-life examples of how the agreements can hurt workers.

In one case, a single father earned about $11 an hour as a security guard for a Florida firm, but resigned a few weeks after taking the job when his child care fell through. Months later, he took a job as a security guard at a bank, making nearly $15 an hour. But the bank terminated his employment after receiving a letter from the man's prior employer stating he had signed a two-year noncompete.

In another example, a factory manager at a textile company saw his paycheck dry up after the 2008 financial crisis. A rival textile company offered him a better job and a big raise, but his noncompete blocked him from taking it, according to the FTC. A subsequent legal battle took three years, wiping out his savings. 

-via CBS Moneywatch, April 24, 2024

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Note:

A lot of people think that noncompete agreements are only a white-collar issue, but they absolutely affect blue-collar workers too, as you can see from the security guard anecdote.

In fact, one in six food and service workers are bound by noncompete agreements. That's right - one in six food workers can't leave Burger King to work for Wendy's [hypothetical example], in the name of "trade secrets." (x, x, x)

Noncompete agreements also restrict workers in industries from tech and video games to neighborhood yoga studios. "The White House estimates that tens of millions of workers are subject to noncompete agreements, even in states like California where they're banned." (x, x, x)

The FTC estimates that the ban will lead to "the creation of 8,500 new businesses annually, an average annual pay increase of $524 for workers, lower health care costs, and as many as 29,000 more patents each year for the next decade." (x)

Clearer explanation of noncompete agreements below the cut.

The Federal Trade Commission's lone Democrat said the GOP majority was “choosing the side of controlling bosses over American workers.”

By Dave Jamieson

Sep 6, 2025, 03:33 PM EDT

The Federal Trade Commission has abandoned the historic prohibition on noncompete agreements it proposed just a year and a half ago, the result of President Donald Trump’s change in leadership at the antitrust regulator.

The agency said Friday that it was voluntarily dropping its appeals in court cases where employers had challenged the legality of the noncompete ban finalized under former President Joe Biden. While the rule had been temporarily blocked due to the litigation, the agency’s withdrawal of support means it is now effectively dead.

Noncompete clauses forbid workers from taking jobs at competing firms for a certain amount of time after leaving an employer. Critics say the agreements keep wages down and stifle innovation by locking workers into their jobs, preventing them from starting their own businesses or taking their talents to the highest bidder.

The ban on noncompetes was one of the hallmark progressive reforms of the Biden era, championed by former FTC chair Lina Khan, who said outlawing the agreements was about restoring workers’ liberty in the labor market. Khan stepped down as FTC chair upon Trump’s inauguration.

The ban’s survival appeared unlikely as soon as Ferguson was named to lead the agency. When Khan introduced the rule, Ferguson claimed it went well beyond the agency’s power, and he maintained that argument in a statement Friday, saying its “illegality was patently obvious.”

Not only would the rule nullify some 30 million noncompete contracts, Ferguson said, it would redistribute “nearly a half trillion dollars of wealth within the general economy.”

In Thailand's dynamic business landscape, where rapid growth meets intricate legal formalities, the contract is the fundamental architecture of any commercial relationship. However, a signed document is not merely a statement of intent; it is a binding legal blueprint that will govern rights, obligations, and remedies in the event of a dispute. For foreign entities and investors, contract review in Thailand is not a passive exercise in legal scrutiny—it is an active, strategic process of risk assessment, cultural translation, and alignment with a civil law system that operates under distinct principles and potential pitfalls. A superficial review focusing solely on financial terms can leave parties dangerously exposed to unenforceable clauses, unexpected liabilities, and protracted legal battles.

The Foundational Framework: Thailand's Civil and Commercial Code

Unlike common law jurisdictions, Thai contract law is primarily codified in the Civil and Commercial Code (CCC), Books III (Specific Contracts) and IV (Obligations). This codification provides a structured baseline, but it also means that many implied terms common in Anglo-American law do not exist unless explicitly written. The principle of freedom of contract is upheld, but within the boundaries of mandatory law, public order, and good morals.

Key CCC principles that directly impact contract review include:

Good Faith (Section 5): Parties must exercise their rights and perform their obligations in good faith. This can influence judicial interpretation, particularly in disputes over termination or performance.

Prescription (Statute of Limitations): Most claims prescribe (expire) after ten years (Section 193/30), but shorter periods apply to specific claims (e.g., two years for overdue interest, one year for hotel or restaurant bills). A contract can shorten these periods, which must be flagged during review.

Specific Performance vs. Damages: While the CCC allows for specific performance, Thai courts often favor awarding damages as a remedy. Enforcing a specific performance order can be procedurally difficult, making liquidated damages clauses critically important.

Mandatory Provisions: Certain protections cannot be contracted away, particularly in labor contracts (governed by the separate Labor Protection Act) and consumer protection contexts.

Beyond Translation: The Cultural and Linguistic Imperative

The single most common and catastrophic error is treating contract review as a mere translation exercise. Language governs interpretation. If a contract is bilingual, it must contain a clause specifying which language version prevails (typically Thai). Relying solely on an English draft when the operative version is Thai is a profound risk.

A skilled reviewer must ensure:

Conceptual Equivalence: Legal and technical terms must have precise equivalents. For example, "joint and several liability" is a common law concept that must be carefully defined if intended.

Clarity in Thai: The Thai language can be more ambiguous than English. Provisions must be drafted with unambiguous, direct language to prevent interpretive disputes. Vague phrasing like "best efforts" or "in a timely manner" should be quantified where possible.

Understanding Nuance: Certain Thai phrases or formalities carry legal weight. The review must ensure that all mandatory legal terminology under the CCC is correctly employed.

Critical Clauses: A Red-Flag Analysis for the Thai Context

A strategic review focuses on clauses that carry heightened risk or require specific tailoring for enforceability in Thailand.

Governing Law and Dispute Resolution: This is the most crucial clause. While parties can choose foreign governing law for international transactions, enforcing a foreign judgment in Thailand is a complex, separate lawsuit. The pragmatic choice is often Thai law. The dispute resolution mechanism requires careful analysis:

Thai Courts: Specify the competent court (e.g., Civil Court, Intellectual Property and International Trade Court). Consider exclusive jurisdiction.

Arbitration: Often preferred for its speed and privacy. The clause must be explicit and detailed, specifying the rules (e.g., UNCITRAL, Thai Arbitration Institute rules), the seat of arbitration (Bangkok is common), the language, and the number of arbitrators. An poorly drafted arbitration clause may be deemed unenforceable.

Liability and Indemnity: Thai law does not naturally recognize broad, all-encompassing indemnity clauses common in Anglo-American drafts. Clauses seeking to indemnify for "all losses" or exclude "consequential damages" may be curtailed by a Thai court if deemed unfair or contrary to good morals. Caps on liability should be reasonable and clearly tied to the contract value. Gross negligence and willful misconduct typically cannot be exempted.

Termination Clauses: The CCC provides general termination rights, but a well-drafted contract must specify material breaches, cure periods, and immediate termination events. The process for notice and the effects of termination (e.g., return of property, payment for work-in-progress, survival of key clauses) must be meticulously outlined.

Intellectual Property (IP) Provisions: Given Thailand's robust IP law and specialized court, IP clauses must be precise. Define ownership of background and foreground IP. Ensure that assignments of IP rights (for employee/contractor creations) are in writing, as required by law. Licensing terms must be clear on scope, territory, and exclusivity.

Force Majeure: The CCC (Section 8) has a narrow doctrine of "impossibility of performance." Contracts should expand this with a detailed, non-exhaustive list of force majeure events (including pandemics, government orders, and severe political unrest), outlining notice procedures and consequences (suspension or termination).

Data Protection: With the enforcement of the Personal Data Protection Act (PDPA), contracts involving personal data processing must include data processing agreements (DPAs) outlining responsibilities, security measures, data subject rights, and cross-border transfer mechanisms.

The Review Process: A Systematic Approach

An effective contract review follows a disciplined methodology:

Phase 1: Context & Objective Setting: Understand the business deal, the parties' leverage, and the core commercial risks.

Phase 2: Structural & Compliance Review: Check formalities (authorized signatories, company registration), ensure mandatory Thai legal provisions are present, and verify alignment with internal corporate policies.

Phase 3: Clause-by-Clause Risk Analysis: Analyze each clause against Thai legal enforceability and business risk, flagging ambiguities, imbalances, and gaps.

Phase 4: Recommendations & Redlining: Provide clear, actionable advice—not just identification of problems. This includes proposing alternative wording, fallback positions, and "deal-breaker" items for negotiation.

Phase 5: Due Diligence Integration: For major agreements, the contract review must be integrated with due diligence on the counterparty (financial health, litigation history, property rights verification for leases).

The Role of Local Counsel: An Indispensable Guide

Engaging competent Thai legal counsel is not an expense; it is a critical investment. A local lawyer brings indispensable value:

Interpretive Insight: They predict how a Thai court or arbitrator will interpret ambiguous language.

Practical Knowledge: They understand the procedural realities of enforcement and the operational practices of Thai government agencies.

Negotiation Acumen: They can navigate negotiations with Thai counterparties, understanding both the legal and cultural subtext.

Precedent Awareness: They have access to and understanding of Thai judicial decisions and arbitration awards that shape the application of law.

Conclusion: From Document Review to Strategic Safeguard

In Thailand, a contract is not just a document to be signed and filed away. It is a living instrument that must be crafted to survive the test of the CCC, the scrutiny of Thai courts, and the realities of the local business environment. Effective contract review, therefore, shifts from a defensive, legalistic task to a proactive strategic safeguard. It is the process of transforming a handshake deal into a resilient, enforceable framework that protects the parties' commercial intent while respecting the sovereignty of Thai law. For the prudent investor or business, it is the essential first step in building a secure and successful long-term presence in the Kingdom. The goal is not to create a weapon for future litigation, but to draft a clear map that ensures the partnership never gets lost.

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