The FTC’s Proposed Rule on Non-Competes for Employees

2 Min Read By Pooja S. Nair

Approximately 30 million people, or 1 in 5 American employees, are bound by a non-compete clause, and this number has trended up over time.  Some states, including California, North Dakota, and Oklahoma have laws making noncompete clauses void for most workers. Eleven other states have also set limits on non-compete provisions based on factors such as the amount that a worker earns, and some states specifically exclude categories of workers, including restaurant workers, from being bound by non-compete clauses.

On January 8, 2023, the Federal Trade Commission (“FTC”) published a broad proposed rule to ban noncompete clauses in employment agreements.  The proposed rule prohibits employers from entering into or attempting to enter into a non-compete clause with a worker; maintain with a worker a non-compete clause; or represent to a worker that the worker is subject to a non-compete clause where the employer has no good faith basis to believe that the worker is subject to an…