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FTC Proposes Ban on Non-Competes

by | Jan 6, 2023 | Associate, Blog, Uncategorized | 0 comments

The Federal Trade Commission (“FTC”) has proposed a new rule which would prevent employers from placing employees under non-compete restrictions. Introduced on January 5, 2023, the proposed rule defines a non-compete as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.”‎ Such provisions, often coupled with confidentiality clauses in standard employment agreements, are considered to be instrumental in protecting intellectual property, particularly an array of trade secrets from customer lists to manufacturing processes, to prevent employees from transferring proprietary knowledge to a competing business. While several states have already banned non-compete restrictions, they remain legal under Florida law if reasonable in accordance with various guidelines from the statute and case law. The FTC rule would supersede state statutes to the contrary.

The FTC has initiated a 60-day period to receive comments before the final version of the rule is published. The proposal can be found here. While the rule may be implemented in the near future, the scope of the FTC’s authority to regulate in this area remains uncertain. Legal challenges are expected that may delay active enforcement.