FTC Announces Proposed Rule Banning Non-Compete Agreements.

On Thursday morning, the FTC announced a proposed rule which bans new non-compete agreements with employees and independent contractors and prohibits enforcement of existing non-compete agreements (in both cases, the only exception is in conjunction with the sale of a business by one who owns at least 25%).

https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition.

Should this rule go into effect, it would require employers to rescind existing non-compete agreements and to actively inform workers that they are no longer in effect. Non-competes have historically been critically important to the business community to protect their trade secrets and confidential business information, and to help to avoid unfair pirating of business models and predatory business practices. There is concern that the rule might also affect non-disclosure agreements that the FTC considers to be “overbroad.”

According to the Press Release, the public comment period will open after the Federal Register publishes the proposed rule, and “The public comment period will be open soon.” Comments will be due 60 days after the Federal Register publication. The FTC Public Comment page can be found at:

https://www.regulations.gov/search?agencyIds=FTC&sortBy=commentEndDate&sortDirection=desc&withinCommentPeriod

If you have concerns about the proposed rule, we urge you to make your views known.