On January 5, 2023, the Federal Trade Commission (FTC) announced a proposed regulation that would completely prohibit non-competition agreements in the workplace. A non-compete clause is a contractual term between an employer and worker that prevents the worker from seeking or accepting certain employment, or operating certain businesses, after the worker’s employment ends. Previously, the FTC issued a statement in November 2022 in which it declared its intention to exercise authority under Section 5 of the FTC Act which would be in line with President Biden’s Executive Order from July 2021 urging the FTC to promulgate new rules governing non-competes. If this were to happen, the consequences for both employers and employees would be significant.
With certain exceptions, the proposed rule would make it illegal to (1) enter into or attempt to enter into a noncompete with a worker, (2) maintain a noncompete with a worker, and (3) represent to a worker that the worker is subject to a noncompete agreement.
Read more . . .