FTC Proposes Rule Banning Non-Competes

• Proposed FTC rule would effectively ban all non-compete agreements with limited exceptions.
• The proposed rule would also apply to non-compete agreements already in effect and supersede state laws that are less protective of the employee.

On January 5, 2023, the Federal Trade Commission published a proposed rule that, if it became final, would ban all non-compete agreements with limited exceptions. The rule would go into effect 60 days after it becomes final, but employers would have 180 days after publication of the final rule in the Federal Register to comply.

The Proposed Rule

What agreements are covered under the rule?

The rule defines a "non-compete clause" as "a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker's employment with the employer." Notably, the proposed rule goes beyond traditional non-competes and