The Federal Trade Commission (FTC) recently published and is seeking comments on a proposed rule that would restrict non-compete agreements. The proposed rule, or set of regulations, would prohibit employers from (1) obtaining non-compete agreements from employees and (2) enforcing such agreements against employees. The proposed regulations would also require employers to notify their employees regarding the invalidity of existing non-compete agreements if the regulations are passed. However, the FTC made clear the proposed rule would not apply to non-disclosure agreements.
Along with the proposed rules, the FTC provided analysis on non-compete agreements as well as proposed alternative rules, including one in which non-competes are enforceable only against a specific category of employees. Companies often use non-compete agreements with key employees to protect intellectual property such as trade secrets. The analysis includes some consideration for these concerns.
The FTC is accepting comments on the rule through March 10, 2023. As of this writing, there have been 5,822 comments provided.