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The FTC Delays Its Proposal to Ban Noncompetes

Posted:

On Monday, March 6, 2023, the Federal Trade Commission (FTC) delayed any potential implementation of its proposal to ban employers from imposing noncompetes on their workers by extending the public comment period.

The FTC unanimously voted to extend the comment period. With the extension, the FTC will now accept comments on the proposed rule until April 19. The deadline was March 20. Commissioner Christine S. Wilson, who formally tendered her resignation on March 2 (effective March 31), issued a concurring statement. She noted that "the proposed rule is a departure from hundreds of years of precedent and would prohibit conduct that 47 states allow" and "would have supported extending the public comment by 60 days."

We also know what the U.S. Chamber of Commerce thinks of the FTC proposal. It will go to court if necessary to stop what it deemed "the legally baseless ban on noncompete clauses" in this WSJ Op-Ed.

In a letter last week to Senators Warren and Whitehouse (pdf), the Chamber clarified that it "opposes this rulemaking not just because it unjustifiably bans the use of noncompetes even when used appropriately, but because the FTC lacks the statutory or constitutional authority to issue a competition rule," a sentiment shared by Commissioner Wilson.

In a separate letter to Congress, a coalition of business groups posited that "the FTC's authority with respect to competition issues is limited to adjudicating individual cases where competition issues are involved where the FTC must consider the factual context and reasonableness of conduct in each such matter."

Posted In: Congressional Activity; Non-Compete Clause (Restrictive Covenant), Non-Disclosure Agreement (NDA)

Want to know more? Read the full article by at The Employer Handbook

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