FTC Invokes New And Expanded Powers To Propose Bar On Employee Non-Competes

The Federal Trade Commission continues to focus on labor-market competition issues with a set of settlements based on its newly asserted FTC Act Section 5 "stand alone" authority, and a highly controversial proposed rulemaking. As our employment colleagues have already written, the proposed rule would ban almost all non-compete provisions in employment relationships, but is still subject to a comment period, finalization, and judicial review. The proposed rule faces numerous and significant legal challenges before it is far from certain that it will ever become effective.

On January 5, 2023, the FTC proposed a complete ban on non-compete clauses in employment contracts (the "Proposed Rule"), including the elimination of all existing non-competes. The Proposed Rule is premised on a preliminary finding by the FTC that non-competes constitute an unfair method of competition, violating Section 5 of the FTC Act. The day before unveiling the Proposed Rule, the FTC's annou