Non-Competes Under Attack

In January 2023, the Federal Trade Commission (the "FTC") issued a proposed rule that would render virtually all non-competes, including even most agreed to as part of a sale of a business, unfair methods of competition and, therefore, illegal in response to a Presidential Executive Order. The FTC's rule also would apply to both current and future non-competes and would require employers to proactively notify current and former employees that their non-competes are no longer in effect and cannot be enforced against them. Additionally, the rule contains a "functional test" that captures any workaround that could achieve the same effect as a non-compete, including certain non-disclosure or non-solicitation agreements. While California, North Dakota, and Oklahoma have long banned non-competes, they are used in many other states, including major business states like New York and Delaware, so this rule would interfere with a major way that companies do business in the