In what has been considered an extremely aggressive maneuver, the Federal Trade Commission earlier this year issued a proposed rule that would ban virtually any noncompete agreement (Non-compete
Clause Rule (”Proposed Rule”), 88 Fed. Reg. 3482 (Jan. 19, 2023), http://bit.ly/4242hP7).

According to the FTC, noncompetes exploit workers, significantly reduce wages, stifle new businesses and ideas, and hinder economic liberty for approximately 30 million American workers. The FTC maintains that employers have less harmful tools at their disposal to protect trade secrets and other business interests than noncompetes, and concluded that these agreements represent an unfair method of competition in violation of Section 5 of the Federal Trade Commission Act. 15 U.S.C. § 45(a)(1).

An avalanche of comments during the Proposed Rule’s notice period followed. On Feb. 16, 2023, the FTC held an online forum inviting public discussion of the Proposed Rule. This article addresses the major takeaways from this discussion and the thousands of comments presented during the public comment period, in addition to providing background information about the Proposed Rule, identifying potential legal challenges, and providing thoughts on what employers should do next.

Read the article below.