The Federal Trade Commission (FTC) promulgated proposed rules on January 5, 2023, which would ban noncompete agreements on a nationwide basis. The 60-day period for public commentary has now begun, and the proposed rules will not take effect until the final version is published, which is anticipated to take effect 180 days after the public comment period; however, it could take longer if there are legal challenges. Legal challenges are, in fact, very likely as the FTC has not traditionally been a regulator of labor and employment matters, and it is debatable whether noncompete agreements with individual employees fall under Section 45 of the FTC Act (15 U.S.C. § 45(a) giving the FTC power to bar "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce," which the agency invokes as its authority for the new proposed rules.

The proposed rules come in five parts, even though they are referred to as "a rule" by the FTC: §910.1, "Definitions," §910.2, "Unfair Methods of Competition," §910.3, "Exception," §910.4, "Relation to State Laws," and §910.5, "Compliance Date." The proposed rules apply to a broad array of "business entities," ("a partnership, corporation, association, limited liability company, or other legal entity, or a division or subsidiary thereof") and to "workers," broadly defined, i.e. "a natural person who works, whether paid or unpaid, for an employer. The term includes, without limitation, an...

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