FTC Proposes Rule to Ban Noncompete Clauses
The Federal Trade Commission (FTC) on Jan. 5 proposed a rule that would ban employers from imposing noncompete agreements with their workers. The FTC’s new rule would make it illegal for an employer to:
enter into or attempt to enter into a non-compete agreement with a worker;
maintain a non-compete agreement with a worker; or
represent to a worker, under certain circumstances, that the worker is subject to a non-compete agreement.
The FTC is seeking public comment on the proposed rule, which is based on a preliminary finding that noncompetes constitute “an unfair method of competition” in violation of Section 5 of the Federal Trade Commission Act.
The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.