Feds Propose Ban on Noncompetes
Dive Brief:
- The Federal Trade Commission proposed Thursday a rule that would prohibit employers and employees from entering noncompete agreements, stating that the agreements harm competition, suppress labor mobility and reduce wages even for those not bound by a noncompete agreement.
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Dive Insight:
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Employer-side attorneys who spoke with HR Dive indicated that there may be several unanswered questions as the proposal moves further along the regulatory process.
In an interview, Dan Morgan, partner at Blank Rome, identified three questions raised by the FTC in its proposal for employers to consider:
- Should franchises be covered by the rule’s prohibition of noncompetes?
- Should the same prohibition be extended to senior executives?
- Should the rule treat workers differently on the basis of their wage levels?
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Per Morgan, the proposal’s provisions requiring employers to rescind existing noncompete agreements, rather than grandfathering agreements made before the effective date of a new rule, is an “unusual” aspect. “I haven’t seen it before,” Morgan said of such requirements in the context of federal agency regulations.
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"Feds Propose Ban on Noncompetes," by Ryan Golden was published in HR Dive on January 5, 2023.