The End of Non Competes?

What Life Sciences Companies Need to Know About the Proposed FTC Rule on Non-Compete Agreements

In January 2023, the Federal Trade Commission (FTC) issued a proposed rule that would ban most non-compete agreements for workers. This proposed rule defines a “non-compete clause” as a contractual term that prevents a worker from seeking or accepting employment with a person or operating a business after the conclusion of their employment with the employer.

The proposed rule would apply to agreements with any worker, including employees, independent contractors, externs, interns, volunteers, apprentices, or sole proprietors who provide a service to a client or customer. The only exceptions to the rule would be non-compete clauses between a seller and the buyer of a business, as long as the party restricted is an owner, member or partner holding at least 25% ownership interest in the business entity.

It’s worth noting that this proposed rule would supersede all state laws, regulations, orders, and interpretations of them that are not consistent with the proposed rule’s requirements. The public comment period is currently open until April 19th, 2023.

While the proposed rule may be good news for workers, it could have significant ramifications for employers in terms of protecting intellectual property, institutional knowledge, and customer lists. In particular, life sciences companies may need to carefully review their current employment agreements and policies to ensure compliance with the new rule if it goes into effect.

At GeneCoda, we specialize in executive search and recruitment services for life sciences companies. If you are a Life Sciences executive and would like help understanding how this may impact your company, GeneCoda offers support and guidance, please contact us.

We hope this information is helpful as you consider the potential impact of the proposed rule on your organization.