Client Alert, Notice of Proposed Rule Making, Non-Compete Clauses

On January 5, 2023, the Federal Trade Commission (“FTC”) released a Notice of Proposed Rulemaking (“NPRM”), which would (a) prohibit the use of non-competition clauses in employment contracts, and (b) require employers to rescind existing non-compete clauses.  A copy of the NPRM, and other information about the proposed rule, is available at the FTC’s website https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking

            At this stage, the rule is only a proposal.  The proposed rule is subject to public comment for 60 days following its publication in the Federal Register, and could be revised by the FTC based on such public comment.  In particular, the FTC is considering exempting senior executives or highly compensated workers from the proposed rule.  The FTC is also considering whether franchisees should be covered by the rule. 

In addition to changes that result from public comments, the rule may be subject to statutory and/or constitutional challenges.  The attorneys at Gozdecki, Del Giudice, Americus & Brocato LLP will continue to monitor the situation regarding this proposed rule, and will be available to advise you if you have any questions about complying with the rule should it go into effect.