The Federal Trade Commission (FTC), an independent government agency responsible for enforcing civil antitrust law and promoting consumer protection, is proposing a new rule that would ban employers in every state from imposing non-competes on their workers.1 The rule defines a "non-compete clause" as "a contractual term between an employer and a worker that typically blocks the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker's employment with the employer."2 This proposed rule would extend to employees as well as independent contractors, either paid or unpaid, and would also require employers to rescind any existing non-competes.3 The rule is based on a finding that non-competes constitute an unfair method of competition in violation of Section 5 of the Federal Trade Commission Act. Section 5 of the Act prohibits "unfair or deceptive acts or practices in or affecting commerce."4
Currently, the proposed rule is in the public comment stage. The FTC's first stage in the rulemaking process is to publish the Notice of Proposed Rulemaking (NOPR), which the Commission already voted to publish 3 - 1.5 After the NOPR is published, the public is invited to submit comments on the proposed rule.6 The comment period for this rule is open until April 19, 2023.7 The FTC will review the comments after the comment period is over and may make changes to the final rule based on those comments.8
Currently, there are over...
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