Last week, the Federal Trade Commission issued a Notice of Proposed Rulemaking which, if finalized, would nullify all employer non-compete agreements. A non-compete agreement is a contractual arrangement between an employer and worker that blocks the worker from working for a competing company or starting a competing business within a certain geographic area and period of time after the worker’s employment ends.
The FTC has found that the use of non-compete clauses by employers negatively impacts the free market resulting in reduced wages for workers. The FTC declares this unlawful, unfair competition which it has the ability to regulate.
The proposed rule makes it illegal for an employer to enter into a noncompete agreement with a worker or represent to a worker that the individual is subject to a non-compete agreement. The rule also requires employers to rescind all existing non-compete agreements. There are very limited exceptions for non-compete agreements between a buyer and seller of a business.
The FTC has requested comments on the proposed rule before it is finalized. A copy of the proposed rule may be accessed by clicking here.
