The FTC Proposes Banning Noncompete Restrictions

The Federal Trade Commission ("FTC") has proposed a rule prohibiting employers from imposing noncompete restrictions on their employees and requiring employers to rescind existing noncompete restrictions. The FTC is basing this proposed rule on its preliminary finding that noncompete restrictions are an unfair method of competition in violation of Section 5 of the Federal Trade Commission Act (the "FTC Act").¹ If adopted, subject to likely judicial challenges, this rule would invalidate noncompete restrictions imposed by employers across the country, many of which have been in place and deemed enforceable for decades. It would likely impact almost every American company and reshape how they engage with current and future employees.