FTC Proposes Rule To Ban Non-Competes

On January 5, 2023, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking (NPRM) that, if adopted, would functionally serve as a complete ban on non-compete clauses and contractual provisions or employment policies that have a similar effect with limited exception.

Key Features of the Proposed Rule

Under the proposed rule, the FTC would deem non-competes between employers and workers "an unfair method of competition" and, therefore, unlawful under Section 5 of the FTC Act. The proposed rule prohibits an employer from: (1) entering into or attempting to enter into a non-compete agreement with a worker; (2) maintaining a non-compete agreement with a worker; or (3) representing to a worker that they are subject to a non-compete without a good faith basis to believe that the worker is subject to an enforceable non-compete. The proposed rule would supersede any inconsistent State law unless such law provides greater worker protections than those