FTC proposes broad ban on noncompete agreements - Jacksonville Business Journal

The Federal Trade Commission has proposed a new rule that would ban noncompete clauses and rescind those currently in effect — a move that could have a seismic impact on employers in a number of fields.

“Research shows that employers’ use of noncompetes to restrict workers’ mobility significantly suppresses workers’ wages — even for those not subject to noncompetes, or subject to noncompetes that are unenforceable under state law," said Elizabeth Wilkins, director of the Office of Policy Planning. “The proposed rule would ensure that employers can’t exploit their outsized bargaining power to limit workers’ opportunities and stifle competition.

The rule exempts noncompete clauses that stem from a person who is willingly selling a business entity or otherwise disposing of all of their ownership interest in a business entity, the FTC said. But the rule that was proposed today is unlikely to be the final rule, Glennon stressed, since it will go through the comment period before it is finalized. Once it is finalized, it will most likely face court challenges. And beyond that, the rule could still change under future administrations, Glennon said, pointing to wage and hour issues and Title 9 issues that have changed from administration to administration.

Legal experts zeroed in on the broad nature of the FTC ban, noting that noncompetes at higher levels, such as executives, are offered along with tangible benefits.

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