FTC’s Proposed Ban on Non-Competition Clauses – What Employers Need to Know and What They Should Be Doing Now

As we noted in an August 2022 blog updating the current landscape on non-competition clauses, , “[i]n 2021, [] President [Biden] issued an executive order encouraging the [Federal Trade Commission (“FTC”)] to ‘consider working…to curtail the unfair use of non-compete clauses and other clauses that may unfairly limit worker mobility.’” The FTC apparently did as it was ordered, and on January 5, 2023, it published a proposed rule that would ban non-competition clauses in virtually all contracts for employment, including those involving independent contractors, and regardless of whether the worker is paid or unpaid. According to the FTC, the use of non-competes must be banned because it is a “widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”