On Jan. 5, the Federal Trade Commission (FTC) proposed rules imposing a broad restriction on noncompetition agreements (proposed rule). The proposed rule would require employers to rescind existing noncompete agreements, and would preempt conflicting state laws. The ban marks a dramatic change not only in the law, but in the relationship between employers and their key employees.
The proposed rule defines “noncompete clauses” as follows: any agreement that prevents a worker from seeking or attempting to seek employment with any employer; or, any agreement that is a de facto noncompete clause. A de facto noncompete clause has the “effect of prohibiting the worker from seeking or accepting employment.” The proposed rule provides examples of a de facto noncompete clause: a nondisclosure agreement drafted so broadly that it effectively precludes the employee from working in their chosen field; or a contractual term that requires the employee to pay the employer or a third party its training costs if employment terminates within a specified time period, but only where the payment is not reasonably related to the actual costs incurred by the employer.
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This is a paid press release. Contact the press release distributor directly with any inquiries. NEW YORK, September 23, 2026--(BUSINESS WIRE)--The Special Committee of the Board of Directors (the ...