Federal Trade Commission Proposes Rule To Ban Non-Compete Agreements for Employees
Highlights
On Jan. 5, 2023, the FTC proposed a new rule that would ban non-compete clauses, preventing employers from entering into non-compete clauses and requiring employers to rescind existing non-compete clauses
Employers will have 180 days after the date of publication of the final rule to comply and must provide current and former employees notice that existing non-compete clauses have been rescinded within 45 days
The proposed rule would not apply to non-compete clauses entered into by a person who is a substantial owner, member or partner in the business entity at the time they enter into the non-compete clause and who is selling a business entity or selling all or substantially all of a business entity’s operating assets
On Jan. 5, 2023, the Federal Trade Commission (FTC) proposed a new rule that would ban non-compete clauses. The proposed rule would prevent employers from entering into non-compete clauses with workers and would require employers to rescind existing non-compete clauses. The FTC’s proposed rule would apply federal restrictions that largely mirror existing legislation in states such as California, North Dakota and Oklahoma. If the rule is adopted, employers will have 180 days after the date of publication of the final rule to comply (the compliance date).
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