On January 5, 2023, the Federal Trade Commission (FTC) made headlines with its announcement that it is proposing a new rule that would ban employers from using noncompete clauses (the “rule”).
The rule, as drafted, would prohibit employers throughout the United States from relying on or enforcing covenants to not compete. It is retroactive, further requiring the rescission of any such restrictive covenants currently in existence by an undetermined compliance date (which will be at least 240 days from the proposal, at the earliest). The rule also specifies that the new federal regulations would supersede any contradictory state law. News of the proposed rule came directly on the heels of the FTC’s announcement that it had entered into consent decrees arising out of two enforcement actions accusing employers of engaging in unfair methods of competition by using noncompetes.
The announcement of the proposed rule and enforcement actions, while stunning to many, are developments that we anticipated and have been preparing for since the outset of the current administration.
Join our Spilling Secrets podcast team on Friday, January 27, at 1:00 p.m. EST for a special live recording. Epstein Becker Green attorneys Peter A. Steinmeyer and Erik W. Weibust will discuss what steps employers need to take now and what to look out for after the comment period ends, including thoughts on survivability and legal challenges to the rule from fellow Member of the Firm and former Acting Attorney General of the United States Stuart M. Gerson.
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If you have any questions, please reach out to Julie Choudhury.
Members of the media, please contact Piper Hall.