FTC Categorical Ban on Post-Employment Non-Competition Agreements in the United States
The FTC recently proposed a categorical ban on post-employment non-competition agreements in the United States. https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking
Citing anti-competitive and wage-stifling concerns, the proposed ban is an expansion of an earlier suggestion that the FTC sought only to ban post-employment non-competition agreements for certain types of employees. The rule also proposes a broad definition of “non-compete clauses” that includes “de facto” non-compete clauses—agreements that may not restrict competition explicitly but do so as a practical matter—and cites an overly broad non-disclosure agreement as an example.
Notably, the proposed rule also seeks comments on potential alternatives to the categorical ban, including bans on such agreements for workers earning less than $100,000 or the use of rebuttable presumptions of invalidity of such agreements as applied to some or all workers.
Employers will have 180 days from the issuance of the rule to implement it and give notice of rescission to those with current non-competition agreements.
If you would like to discuss the proposed rule with one of our attorneys, please contact us at 512-732-8900.