Yesterday, the Federal Trade Commission (FTC) announced that, next Tuesday, April 23, it will be releasing the final version of its proposed rule largely prohibiting employee non-competition restrictions. See FTC Announces Special Open Commission Meeting on Rule to Ban Noncompetes | Federal Trade Commission. The announcement will be preceded by a vote by the five FTC commissioners on whether to “authorize public disclosure of the proposed final rule.” Assuming that disclosure is authorized, which is expected, the FTC will present the rule and then vote to issue it. As of yet, there has been no indication whether the final rule will be the same as the proposed rule or, if not, what the changes will be.
As we have previously discussed (in January 2023 and on February 14 and 15, 2023), the rule, which was first proposed in January 2023, will be a major change from the FTC’s past practice with regard to employee non-competition restrictions. Until now, the FTC and other federal agencies have left non-compete regulation to the states, resulting in widely varying approaches. The new FTC rule has the potential to be a complete, nationwide ban on employee non-competes, other than in a sale of business context.
We have been following the rule closely since it was first proposed and submitted for public comment and will be hosting a seminar on the new rule, and changes in the non-compete space generally, on April 24, 2024, from Noon – 1:00 p.m. EDT. More information is available here. We also will be providing a full written update once the rule is announced. Stay tuned!
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