FTC Proposes Prohibiting Noncompete Agreements
Date postedJanuary 10, 2023
Carol Highsmith. (2005). “The Apex Building” [Photo]. Retrieved from Wikimedia Commons.
- The Federal Trade Commission proposed Thursday a rule that would prohibit employers and employees from entering noncompete agreements, stating that the agreements harm competition, suppress labor mobility and reduce wages even for those not bound by a noncompete agreement.
- In the historic proposal, the FTC said other forms of restrictive covenants, such as nondisclosure agreements and client or customer nonsolicitaton agreements, would not be included in the law’s definition of a noncompete agreement. Employers would be required to rescind existing noncompete clauses and provide notice to workers that such clauses are no longer in effect. It would include a “limited exception” for noncompete clauses between the seller and buyer of a business.
- Stakeholders will be permitted to make public comments on the proposal for a period ending 60 days after it is published on the Federal Register. A compliance date would be set 180 days after the publication of a final rule.