FTC's Proposed Rule to Prohibit Non Competition Clauses

On January 5, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking that proposes the prohibition of "non compete clauses": contractual terms between employers and a workers that prevent workers from seeking or accepting competitive employment for a period of time after the end of the worker’s employment with the employer. The FTC Fact Sheet, linked here, sets forth the agency's reasoning and outlines the proposed Rule's extremely broad application.

This proposed Rule has a road ahead. The public and employers will submit comments during the 60 day period after publication of the proposed Rule (in this case, until March 6, 2023). Employers will respond vociferously, and there will be significant legal challenges and judicial action. This is not a fait accompli.

Stay tuned. In the meantime, it's never a bad idea for employers to audit and evaluate non-competition/non-solicitation/no-raiding/non-disclosure agreements that are contemplated and in use.

We will update our clients as more information becomes available.