On Jan. 5, the Federal Trade Commission (FTC) voted 3-1 to propose a new rule under Section 5 of the Federal Trade Commission Act that would largely ban noncompete agreements between employers and employees. If passed, the proposed rule would become a federal regulation, albeit subject to judicial review, making it an “unfair method of competition” for an employer “to enter into or attempt to enter into,” “maintain” or “represent to a worker that the worker is subject to a noncompete clause.” A preamble to the notice of proposed rulemaking cites the harm that noncompetes purportedly inflict on workers whose compensation and mobility are stymied by noncompetes and new business enterprises that find it difficult to break into an industry where skilled labor is locked into existing employment arrangements.

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