The FTC’s Notice of Proposed Rulemaking of its Non-Compete Clause Rule, which would ban non-competes altogether if promulgated, opened 2023 with a bang. Whether it goes into effect, in what form, and whether the Rule will survive the legal challenges it will encounter, all remain to be seen and likely will not be resolved for many months, if in 2023 at all.[1] In the meantime, employers still need to contend with the ever-evolving world of non-compete law in the United States. The year 2022 saw an ongoing trend of legislatures passing laws intended to narrow the scope of non-competition agreements but courts—including in California, which may be a surprise for some to hear—continuing to enforce them. Meanwhile, other courts continued grappling with important issues—such as sale of business criteria and under what circumstances may a sale-of-business non-compete be unenforceable—that are already important now and will become even more so if the FTC’s proposed ban goes into effect. Other decisions dealt with evergreen issues such as contract interpretation and blue penciling. And still others considered the ever-increasing importance of California’s choice-of-law and choice-of-forum exception codified in California Labor Code Section 925(e). Below is a summary of some key non-compete highlights from 2022.
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