Federal Trade Commission Proposes Rule To Ban Non-Compete Clauses

The United States Federal Trade Commission (FTC) recently issued a proposed rule that, if adopted, would broadly prohibit employers from entering into post-employment non-compete agreements with workers, and would also require employers to rescind any such existing non-compete agreements. The proposed rule, released on January 5, 2023, provides that non-compete clauses with workers are an unfair method of competition. The proposed rule is expected to receive a substantial number of comments and face fierce legal opposition; therefore, any final rule (if adopted at all) may differ significantly from the proposed rule.

Summary of the Proposed Rule

The proposed rule would prohibit an employer from entering, or attempting to enter, into any contractual agreement that would prevent a worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker's employment with the employer. The proposed rule would apply to