FTC’s Non-compete Rule Proposal – When We Can Expect Action?

FTC’s Non-compete Rule Proposal – When We Can Expect Action

The Federal Trade Commission (FTC) has long been positioning itself to enact a new rule. This rule would ban non-compete clauses across the entire nation. It aims to relevel the playing field for business competition in line with Section 5 of the FTC Act. Regrettably, the delays and indecision have disheartened and frustrated many states. Numerous individuals believe that the new rule might undergo dilution before its implementation. Take a look below to learn more about the events to date. Discover when we can anticipate further action.

What Does the FTC Proposed Rule Cover?

The primary goal of the proposed FTC ban on noncompete agreements is to prevent harm to workers and business competitors. According to the FTC, the current system not only impedes the formation of new businesses but also exploits workers, leading to a yearly decrease in their earnings by $300 billion.

To initiate change, the FTC began by soliciting public opinion. However, this process resulted in extensions of the deadline for comments, postponing the implementation of any new changes. This extension left many individuals feeling frustrated. Nonetheless, the FTC clarified that the additional 30-day deadline was granted in response to significant public demand for more time. With the deadline now passed, the FTC is diligently reviewing the responses, and there is eager anticipation for their decision and subsequent steps.

How Are States Currently Handing the Noncompete Issue?

Non-compete agreements spark serious debate across many US states. Some states have already chosen to ban them. New York joins in, fast-tracking a bill to Governor Kathy Hochul. Debate ensues over the bill’s breadth. Some see New York seizing the momentum seen in other states. Regardless, a ban in New York seems likely. Other states are poised to follow suit.

This decision to enact state bans on non-compete agreements underscores employee desire for a wider federal rule but also creates a sense of disparity across the country, giving those that use noncompete agreements a way to continue using them and adding to the inequality of competition that is stifling the potential for small businesses and employees to thrive.

When Can We Expect Action From the FTC?

When will the FTC issue a decision about the proposed rule? An official timescale remains unknown. Sources hint at action by Q1 of 2024 or potentially by the end of 2023. Any FTC ruling will likely face challenges regarding governance authority over non-competes.

When the decision is finally announced, both opposition and support for it will emerge, and we eagerly anticipate observing the scope of the final ruling. Contact us and stay informed on the updates.