According to Bloomberg, The Federal Trade Commission (“FTC”) is not expected to vote on the final version of a new rule that would ban noncompete clauses in employment contracts until April 2024. The rule defines a “non-compete clause” 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.”

As we previously reported, the proposed rule would ban employers from imposing noncompete agreements on their employees. The rule would also require employers to rescind all preexisting noncompete agreements and to notify all employees who had been subject to a noncompete agreement of the recission. Although the proposed rule would not prohibit other kinds of employment restrictions, such as nondisclosure agreements, certain restrictions that are overbroad could be subject to the new rule. For example, a non-disclosure agreement between an employer and an employee that is written so broadly that it effectively precludes the employee from working in the same field would be considered a “de facto” noncompete clause.

Continue Reading Final FTC Rule on Non-Competes Not Expected Before April 2024

A Ruling and Order issued on April 28, 2023 by the U.S. District Court for the District of Connecticut in United States v. Patel, et al. ran the government’s losing streak to four failed trials seeking to criminally prosecute alleged wage-fixing and no-poach agreements. 

To review, in 2016 the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued Antitrust Guidance for Human Resources Professionals that warned of potential criminal prosecution for so-called “naked” no-poach agreements, i.e., agreements among competing businesses to restrict hiring or compensation of employees, untethered to any legitimate collaborative relationship. 

Continue Reading DOJ Fails Again in a No-Poach Prosecution

It is no secret that political winds are blowing against the practice of employers requiring certain employees to sign non-competition agreements, as demonstrated most saliently earlier this year when the Federal Trade Commission (“FTC”) introduced its proposed rule that would ban non-competes nationwide, with retroactive effect.  While thousands of comments have been submitted to the FTC regarding that proposed rule (and the comment period is scheduled to close this week), legislators in many states have been busy introducing legislation that would ban or limit the use of non-competes.

Continue Reading Minnesota Takes Step Toward Banning Non-Competes

FTC Commissioner Christine Wilson, published an Op-Ed in the Wall Street Journal today in which she announced her resignation from the FTC and explained her reasoning. Readers may recall that Commissioner Wilson was the lone dissenting voice on the FTC’s proposed rule banning noncompetes nationwide.

Continue Reading FTC Commissioner Christine Wilson, the Lone Dissenting Voice on the FTC’s Proposed Noncompete Ban, Resigns

The Federal Trade Commission (FTC) has announced that it will be hosting a public forum on February 16, 2022, from 12:00-3:00 p.m. ET, to discuss its proposed nationwide noncompete ban. The forum is intended to supplement the FTC’s request for written comments, which as of today have exceeded 10,000. According to the FTC, “[t]he commission will hear from a series of speakers who have been subjected to noncompete restrictions, as well as business owners who have experience with noncompetes.” It is unclear whether any of the “business owners who have experience with noncompetes” support their use, or

Continue Reading FTC Announces Public Forum on Proposed Noncompete Ban

Senators Chris Murphy (D-CT) and Todd Young (R-IN) introduced legislation on February 1, 2023 entitled the Workforce Mobility Act (the “Act”). This bill has been introduced previously, but never made it out of committee.

Continue Reading Here Come the Legislators – U.S. Senators Reintroduce Legislation That Would Ban Noncompetes and Empower the FTC to Regulate Them

As we predicted, earlier today, 100 industry organizations submitted a request to the Federal Trade Commission (FTC) to extend the comment period for its proposed rule banning noncompetes nationwide by an additional 60 days. According to the letter, “[t]he regulated community should be given sufficient time to assess the potential consequences of the rulemaking and develop insightful comments for the Commission to consider.” The letter further states:

Continue Reading 100 Industry Organizations Request Extension of Comment Period on FTC’s Proposed Noncompete Ban

As previously reported, the Federal Trade Commission (FTC) proposed a rule on January 5, 2023, that would ban noncompetes nationwide. There are serious questions about the FTC’s authority to promulgate such a rule and many practical reasons why such a sweeping approach is unwarranted—in particular at the federal level. The period for submitting formal comments to the proposed rule lasts 60 days following publication of the proposed rule in the Federal Register. The FTC did not file the proposed rule with the Federal Register until January 18, 2023, and it will not be published until January 19, 2023, meaning that the comment period will end on March 20, 2023—not March 10, 2023, as the FTC initially announced. We are told that there will be a formal request to extend the comment period for an additional 60 days, or until May 19, 2023, and that the FTC is likely to grant the request.

Continue Reading Comments to the FTC’s Proposed Noncompete Ban Due March 20, 2023 – and the Comment Period May Be Extended Another 60 Days

Our colleagues Erik W. Weibust, Peter A. Steinmeyerand Stuart M. Gerson co-authored an article in the Legal Backgrounder, published by the Washington Legal Foundation, titled “After 200+ Years Under State Law, FTC Proposes to Sweep Away All Noncompetes in Unauthorized Federal Power Grab.”

Following is an excerpt:

Continue Reading FTC Proposes to Sweep Away All Noncompetes in Unauthorized Federal Power Grab

“Practices that three unelected bureaucrats find distasteful will be labeled with nefarious adjectives and summarily condemned, with little to no evidence of harm to competition. I fear the consequences for our economy, and for the FTC as an institution”

 – FTC Commissioner Christine S. Wilson

The Federal Trade Commission (“FTC”) started 2023 with a bang. In addition to issuing a proposed Rule that would ban post-employment noncompetes nationwide, the FTC announced that it had settled two previously undisclosed enforcement actions and entered into proposed consent orders with three employers based on a novel legal theory.  According to the Complaints filed in each action, the FTC contends that the defendant employers’ use of broad post-employment non-compete agreements constituted “unfair methods of competition” in violation of Section 5 of the FTC Act. Unfortunately, the timing of the announcement of these enforcement actions—one day before announcing the proposed rule—seems intended to discourage employers from challenging the FTC’s authority to issue rules banning, or otherwise regulating, noncompetes, and to intimidate the business community.

Continue Reading FTC Enforcement Actions Stake Out Aggressive New Position on Post-Employment Non-Compete Agreements