Noncompetition Agreement. FTC Puts Employers on Notice: Employee Non-Competes Are Problematic and Could Soon Be Unlawful
The back-to-back announcements come in the wake of FTC and Department of Justice workshops in 2020 and 2021 about the economic effects of restrictions on worker movement; a growing chorus of advocacy groups and economists; and a Presidential Executive Order calling on the FTC to curtail, or do away entirely, with employee non-competes.
February 06, 2023 at 03:27 PM
6 minute read
Employment Law
Over the summer, Federal Trade Commission (FTC) Chair Lina Khan announced that the FTC was considering a new regulation targeting employee non-competes and that the agency would also use enforcement actions to target them. The FTC just followed through and in the span of 24 hours, took two unprecedented steps: On Wednesday, Jan. 4, 2023, the FTC brought its first-ever enforcement actions against the use of non-competes, announcing settlements with three companies over allegations that their respective non-compete restrictions were unfair methods of competition in violation of Section 5 of the FTC Act. The FTC followed up the morning of Jan. 5 by announcing a Notice of Proposed Rulemaking that would render most employee non-compete provisions "unfair methods of competition" and therefore unlawful under Section 5 of the FTC Act.
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