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Noncompete Ban Tees up 1st Test of FTC’s Rule Powers


Industry advocates and members of the bar have come out swinging against the Federal Trade Commission's first attempt to deploy its essentially unused power to regulate unfair competition, a sweeping proposed ban on employment noncompete agreements.


Nor would all other safeguards be acceptable under an FTC warning in the rulemaking that it would also target NDAs and similar restrictions deemed so sweeping that they amount to "de facto" noncompetes. The FTC left the definition of such de facto language largely open-ended, raising concerns that it would be up to the agency to decide what counts and what doesn't.


Blank Rome LLP employment partner Leigh Ann Buziak also said the de facto agreements are a relatively "nascent trendline" that have only been addressed in a few court cases, making it surprising for her that the FTC would weigh in when the law is relatively underdeveloped and when confidentiality agreements are in most cases "almost certainly enforceable."

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"Noncompete Ban Tees up 1st Test of FTC’s Rule Powers," by Bryan Koenig was published in Law360 on January 6, 2023.