In January, the Federal Trade Commission (“FTC”) issued a proposed rule that would ban almost all noncompete clauses imposed on workers, which includes employees and independent contractors, nationwide. What’s the status?
OUR ANSWER FROM HORTYSPRINGER ATTORNEY NICHOLAS CALABRESE:
The proposed rule has not been made final yet. The FTC proposed the rule because it believes that non-competes are a violation of the Federal Trade Commission Act. The proposed rule would prohibit an employer from: (1) entering into a non-compete with a worker; (2) maintaining a non-compete with a worker; or (3) representing to the worker that the worker is subject to a non-compete. So, it would ban new non-competes and require that existing non‑competes be rescinded. Also, the proposed rule would prohibit language that could act as a non-compete clause – a non-disclosure agreement that contains broad language, a provision that workers repay training costs if the worker leaves employment, or other language that bars workers from seeking other employment.
The FTC received over 20,000 public comments on the proposed rule. Evelyn Wood herself would have had trouble wading through that many comments quickly, so at this point, the best guess is that the FTC will vote on the final rule in the Spring of 2024. Another best guess is that the proposed rule, even if altered, will pass and become a final rule. The final best guess is that the final rule will be challenged in court – no guess on how that litigation will turn out! But, we will keep you updated.
If you have a quick question about this, e-mail Nick Calabrese at firstname.lastname@example.org.