Next week, the feds will vote on whether to ban most noncompetes

Yesterday, the Federal Trade Commission announced that it would hold a “special open Commission meeting” on April 23 to vote on whether to issue a proposed final rule that would prevent most employers from enforcing noncompetes against workers.

In January 2023, the FTC proposed a rule generally prohibiting employers from imposing noncompetes on their workers. Specifically, it would make it illegal for an employer to enter into or attempt to enter into a noncompete with a worker. Worker means a natural person who works for an employer, whether paid or unpaid. The term includes, without limitation, an employee or individual classified as an independent contractor, extern, intern, volunteer, apprentice, or sole proprietor who provides a service to a client or customer.

Under the proposal, an employer that entered into a noncompete clause with a worker before the compliance date must rescind the noncompete clause no later than 180 days after publication of the final rule.

Other employment restrictions, like nondisclosure agreements, could be subject to the rule if they are so broad in scope that they function as noncompetes. The proposed rule is silent about non-solicitation agreements.

I wrote about the original proposal and then spent another hour discussing it. Then, the FTC received more than 26,000 comments from members of the public.

Now, fast forward.

At the start of the April 23 meeting, the FTC will vote on whether to authorize public disclosure of the proposed final rule. If the ayes have it, a short presentation on the rule will follow. Finally, the FTC will vote on whether to issue the final rule without taking any further comments.

You can watch a webcast on the FTC’s website. The following day, I’ll provide a full update with a link to the recorded video.

If you have noncompetes with your current and former employees, clutch your pearls. If the FTC votes to approve a final rule banning noncompetes, bet on an avalanche of lawsuits to block its implementation.

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On Friday, April 19, at Noon ET, The Employer Handbook Zoom Office Happy Hour will return on April 19, 2024. Along with my partner, Amy Epstein Gluck, I will discuss the EEOC’s Pregnant Workers Fairness Act final regulations and take your questions, which you can submit in advance here.

The Zoom is free, but space is limited. You can register for it here.