FTC Proposes Rule Banning Non-Competes With Workers

On January 5, the Federal Trade Commission (FTC) promulgated a proposed rule that would effectively ban all non-competes with employees and other workers (Proposed Rule). If adopted in its current form, the Proposed Rule would result in a substantial change in the way that employers and investors utilize restrictive covenants with corresponding impacts in a number of areas, including compensation structure, protection of confidential information, merger and acquisition dynamics, and deal valuation.

The Proposed Rule

As drafted, the Proposed Rule would eliminate nearly all post-employment non-compete restrictions. Key features of the Proposed Rule include:

• Non-Compete Definition. The Proposed Rule defines non-compete clauses broadly to include any 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