FAQs for Recent FTC Actions Against Employer/Employee Non-Compete Clauses
In early January 2023, the Federal Trade Commission ("FTC") proposed an unprecedented rule banning most employer/employee non-compete clauses. As detailed below, the rule is not likely to take effect for at least eight months, and possibly longer (if ever), given the likelihood of challenges to the FTC's authority to issue the rule. More significant for the immediate future, the FTC also filed and settled cases against three companies and two individuals, alleging that employer/employee non-compete restrictions violated Section 5 of the FTC Act.
In this White Paper, we: (i) summarize the proposed ban and the FTC's recent cases; (ii) identify how businesses can minimize their risk of an FTC investigation; and (iii) provide guidance for businesses about how to react (and not overreact) to the uncertainty that the FTC's recent actions have created.
Updated to reflect the FTC's extension of the public comment period to April 19.
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