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What Does the New FTC Ban on Non-Competes Mean for Your Cleaning Business?

April 26, 2024 in Announcements, Business

Last Updated on April 29, 2024 by The ZenMaid Team

The Federal Trade Commission (FTC) just issued a final rule that bans non-compete clauses nationwide, a move that will impact various sectors, including the cleaning industry. Here’s what you need to know. 

What Does the FTC Ban on Non-Competes Mean for the Cleaning Industry?

The new rule will eliminate non-compete agreements for most employees, effective 120 days after its publication in the Federal Register. This will impact maid services that have depended on these agreements.

Employees will be able to change jobs or even start their own cleaning service if they so wish. Cleaning businesses will likely need to explore innovative strategies for managing and retaining their staff.

How will this change affect my current non-compete agreements?

Once the FTC’s new rule kicks in, most of your non-compete agreements, except those with your top executives, won’t hold up. Essentially, you won’t be able to enforce these agreements with most of your employees if they decide to join a competitor or start their own business in the same field.

What can I do to protect my cleaning business now?

Even though you won’t be able to use non-competes like before, you’ll still have options to safeguard your business secrets and client base. 

For instance, you can consider using Non-Disclosure Agreements (NDAs) to keep your confidential info under wraps. You can also use Non-Solicitation Agreements to prevent your former employees from nabbing your clients or persuading other employees to leave your company. 

These are options to protect your business without limiting your employees’ future job opportunities too much. That said, always be sure to meet with a lawyer or legal representative before making any changes.

When do these new rules start?

The new rules will start 120 days after they’re officially published in the Federal Register. This gives you a window to get things in order — review your contracts, talk with your lawyer, and adjust your business practices to make sure you’re on the right side of the law when the change takes effect.

What Cleaning Industry Leaders Have to Say About It

We asked our ZenMaid community and cleaning industry leaders what they thought of the new ruling. Here’s what they said:

“Cleaning skills and running a cleaning business are two very different things.”

Cheryl Hajjar – Founder & President Maid Brite Cleaning

“If your brand is built effectively and is a well-known brand, there shouldn’t be any insecurity about one of your own cleaning techs starting their own company and competing against you. After all, having cleaning skills and knowing how to build a great cleaning business are too very different things.”

Just because they may have good cleaning skills, doesn’t mean they have the skills and knowledge to run a cleaning business, which are too very different things.  

“This new ruling strips away a crucial layer of protection for employers…”

Sharon Cowan, CBSE – Chairman & President Cleaning Business Consulting Group

“Non-compete agreements are essential for protecting employers from losing intellectual property, employees, trade secrets, and customers. There are already lawsuits in progress aiming to halt this new ruling before it starts in six months. 

Although enforcing these agreements can be challenging, especially for non-executive positions, they are effective when crafted correctly. I’ve personally dealt with this when I ran my business — I successfully enforced non-compete agreements and won cases based on the loss of customers and revenue due to an employee who took several clients. 

This new ruling strips away a crucial layer of protection for employers in an industry known for its high turnover and vulnerability to losses in training, development, advertising, and intellectual property.”

“I do not worry about competition from former employees, ever.”

Stephanie Pipkin – Owner of Serene Clean

“We have never had a non-compete in place as they were difficult to enforce for our industry and were really more of a scare tactic. What we do have, and will continue to have, is a Confidentiality Waiver and a Non-Solicitation agreement for both our clients and our staff to sign upon starting services or a new employee starting. This protects us if former employees try to take our clients by using information they obtained working for us, and stops clients from asking our employees to work on the side for them for cash. 

We also set our Zenmaid settings so that employees can’t look back on their schedule for more than a week to make it more laborious if they were trying to keep all of their client’s information saved. 

Your focus should be on a really strong workplace culture that creates loyalty, transparency, and accountability from your staff. I’ve had many instances of former clients trying to get staff to clean on the side for them, and every time, the employee has told us. 

I am not concerned about former employees starting cleaning companies up after working for me. Even if someone is a great cleaner, that does not mean they will be competition to my business. 

I have had many former employees start up cleaning after they left my company. There are only a few scenarios that have happened. They either:

1) Fill up quickly with their 10-20 clients, and that’s it. Is losing those clients if they do happen to come from us the end of the world? No. And oftentimes, they’ll come back to you anyways

2) Attempt to have a friend help them or have an employee, and it completely falls apart

3) They are unable to get clients as they have zero social proof of their work. There are so many individual cleaners out there. It’s quite difficult to stand out as an individual cleaner.

I do not worry about competition from former employees ever. They cannot do what we do. That’s not cockiness. That’s the confidence that we have put in the work to stay ahead of the game. 

Take that energy and stress and pour it into becoming the best company possible to work for. Pour it into getting reviews and having a strong online presence. Pour it into having excellent communication with your clients and give generously to your community. 

If you are doing all of these things, it would be incredibly difficult for a former staff member to be a real threat to your business. And if they start to become one, use that to push you to greater heights in your business. 

But remember- more often than not, their fire for this will burn out quickly. Running a business successfully seems easy and great until you actually have to do it.”

“Overall, I’m not concerned…”

Ashlie Mitchell – Owner of The Sparkle Cleaning Company:

“Honestly, I’m considering revising our contracts to focus solely on acquiring our clients after employment ends. 

Here’s the thing: if someone wants to learn the ins and outs of cleaning by working with the best out there and then venture out on their own, more power to them! There’s plenty of business out there. 

Sometimes cleaners underestimate the challenges and responsibilities involved. They might think it’s easy money, but they often have no idea about the behind-the-scenes work I do – advocating for them, negotiating with clients to make their jobs easier, rearranging schedules to accommodate their requests for time off, correcting their mistakes, collecting money or even handling deep cleans. 

If someone has the cleaning skills but feels our company isn’t the right fit, why should I prevent them from using those skills elsewhere? If they believe the grass is greener with another cleaning company, they’re welcome to explore. 

In fact, I recently hired someone who was leaving another cleaning company where I used to work about 8 years ago. I know the owner personally, and he’s toxic. He actually threatened to sue me if I didn’t fire her. Well, I have trust in my God that the battle is already won, so I politely declined his demand and stood by my decision to retain her and she is seriously one of my hardest workers! She was just under the wrong leadership! 

Overall, I’m not concerned about technicians starting their own businesses or utilizing the skills we’ve equipped them with. What does concern me is if they poach our clients. However, if a client chooses to switch services with a former technician, and their values don’t align with ours, then I’d rather not service them anyway. Just my two cents.”

“I don’t think this is actually a big deal for maid services.”

Amar Ghose – Founder and CEO of ZenMaid

“Personally, I don’t think this is actually a big deal for maid services. If we’re being completely honest with ourselves we all know that it has never been worth it to actually take someone to court over a non-compete in this industry. 

With that in mind, this allows maid service owners to stop worrying about something that will happen to all of us eventually anyway. It’s more important how we deal with it when it occurs vs trying to stop it in the first place. Cleaners have always left for other cleaning companies, and they always will.

Final Thoughts

We’ll continue to update this article as new information comes out. With the FTC’s new ruling on non-competes, how do you envision these changes impacting your cleaning service?

Start a conversation about it in the ZenMaid Mastermind — a free Facebook Group where 8,000+ maid service owners meet to help each other through the industry’s ups and downs.

If you found this article helpful for your maid service, you may also like:

ZenMaid

Amar is the founder and CEO of ZenMaid Software, Inc. He started and ran Fast Friendly Spotless, a maid service in Orange County, CA. With the help of customized software to automate work he successfully operated the service in under 30 minutes per day. He created ZenMaid scheduling software to help other maid service owners do the same.

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