Proposed FTC Rule Would Ban Noncompete Agreements

By Community Manager posted 01-13-2023 09:30 AM


Earlier this month, the Federal Trade Commission (FTC) published a Notice of Proposed Rulemaking, which, if implemented, would ban employers from entering into noncompete agreements with new employees and require that they rescind any noncompete agreements with existing employees. State laws that provide greater protection for employees would stay in place, but the proposed rule would override state laws less protective of employees.

The FTC is seeking public comment on the proposed rule. The comment period will be open for 60 days from January 5, 2023, the date of publication in the Federal Register. The FTC will review the comments and make changes.

If the rule is established, the effective date would be 60 days after the final rule is published in the Federal Register. Employers would have 180 days from publication to come into compliance.

While the rule is currently proposed and is likely to change at least slightly, employers should monitor the status closely. To prepare, employers may consider auditing their noncompete practices to determine the impact of the rule.

We anticipate there will be legal challenges to the final rule and Employers Council will update members when more information is available. Please contact our Member Experience Team with questions.