The Federal Trade Commission (FTC) recently proposed regulation on non-compete agreements, if enacted, would ban all worker non-compete agreements (for all employees and individual independent contractors) in all industries and positions, with only limited exceptions for agreements involving the sale of a business or agreements between a franchisor and franchisee, sweeping away centuries of common law and overriding statutes in 47 states which permit enforcement of non-competition agreements under certain circumstances.
The Proposed Rule
On Jan. 5, 2023, the Federal Trade Commission issued a Notice of Proposed Rulemaking (notice) in which it proposed an across-the board ban on post-employment non-compete agreements for all employees and individual independent contractors, in all industries and positions (including highly skilled workers and senior executives). The only exceptions are for: a) non-compete agreements given by a business owner in the context of the sale of the business; and b) non-compete agreements between a franchisor and a franchisee. If and when the regulation becomes effective, all non-compete agreements are immediately rescinded and unenforceable. Employers must promptly notify all persons subject to such agreements (including current and former workers) within 45 days after the compliance date that the non-compete agreements have been automatically rescinded. The notice invites public comment by no later than March 20, 2023.
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