The Federal Trade Commission (FTC) has announced that it will vote on a proposed rule that would ban most noncompete agreements for employees. If passed, the FTC predicts the new rule would increase employee wages and expand career opportunities.
The noncompete ban would apply to paid or unpaid employees, as well as independent contractors. The ban would make it unlawful to enter into, attempt to enter into, or maintain the enforceability of noncompete agreements. Employers would also be prohibited from misleading employees about the status of a noncompete, and the ban would likely invalidate current noncompete agreements.
The only noted exception to the ban would permit a noncompete when entered into by an individual who is selling a business entity, disposing an ownership interest, or selling a business’s operating assets.
According to the FTC, nearly 18 percent of United States workers are subject to noncompete agreements. Companies across various industries and job levels use some form of noncompete clause or agreement. Employers often leverage their bargaining power to compel workers to sign these agreements.
The FTC argues that noncompete agreements impede competition by restricting workers from seeking better opportunities and limiting employer access to wider and stronger talent pools.
If passed, the noncompete ban would be one of the few instances of the FTC utilizing their regulatory authority to enforce new labor and employment laws.
The upcoming vote follows a 90-day notice and comment period, during which the FTC received over 26,000 comments. The upcoming vote will take place in a special open commission meeting on April 23, 2024. Virtual attendance is open to the public.
If you have questions about the upcoming FTC vote and how any new rules would affect your employment, contact the employment attorneys at Potomac Legal Group PLLC.
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