Noncompete Rulemaking Update – Employees still waiting.
Employees have at least 6 months more waiting time left for a major regulatory employment law change.
On January 5, 2023 the FTC proposed a rule that would make existing and future non-compete agreements illegal.
Since then, the FTC voted to extend the public comment period by 30 days with one member of the Commission stating she would have voted for a 60 day extension “[g]iven that the proposed rule is a departure from hundreds of years of precedent” that “would prohibit conduct that 47 states allow.”
The extended public comment period ended on April 19, 2023. The FTC received nearly 27,000 public comments. In particular hospitals and doctors were known to be at odds.
Now that the comment period is over, there is a 180 day-notice period before the rule can go into effect. That means the earliest the rule can go into effect is mid-October.
It is expected that lawsuits will follow over the rulemaking process and the FTC’s authority to make this rule.
If the rule withstands the legal assault this will be a monumental paradigm shift in favor of workers. Employees, if the noncompete ban is enforceable, will no longer be bound by restrictive covenants and will gain more bargaining power and leverage to insist on better terms and conditions of employment.