The Federal Trade Commission (“FTC”) recently voted to extend the public comment period for its proposed new rule to ban employers from imposing non-competes on their workers. The public comment period was extended by the FTC for 30 days, until April 19, 2023. Originally the public comment deadline had been March 20, 2023. The proposed rule has prompted more than 10,000 public comments.
The FTC’s rule banning employer non-competes, which was announced on January 5, 2023, “is based on a preliminary finding that non-competes constitute an unfair method of competition,” according to the agency, and “therefore violate Section 5 of the Federal Trade Commission Act.” Read more about the FTC’s proposed ban on worker non-competes here.
The FTC described the vote in favor of extending the public comment period as “4-0,” with Commissioner Christine S. Wilson issuing a concurring statement.” Wilson’s concurrence did not appear to be an endorsement of the FTC’s proposed ban on non-competes, stating, “Given that the proposed rule is a departure from hundreds of years of precedent and would prohibit conduct that 47 states allow, I would have supported extending the public comment by 60 days.”
The concurrence reflects the significant debate surrounding the FTC’s proposed rule and the divergent views on the use of employer non-competes. Employee rights advocates support the restrictions in the proposed rule, some even pushing for further extensions of the proposed rule. Business interests, on the other hand, generally have opposed the proposed rule as written.
After closure of the comment period and consideration of all comments submitted by the public, the FTC can publish and finalize the rule in its current form, or with modifications, which may take the agency some time to do given the high volume of comments that the agency has already received. As written, the FTC has proposed a compliance date of 180 days after a final rule is published in the Federal Register. Legal challenges to the FTC’s authority to implement a ban on employer non-competes are widely expected from business interest groups and other interested parties and may result in further delays in any implementation of a final rule.
At Bean, Kinney & Korman, we continue to emphasize to our business clients the importance of considering their current reliance on, and future potential need to, restrict the ability of workers to engage in competitive activities both during and after termination of employment. For many employers, this should entail strengthening existing employee non-solicitation provisions and fine-tuning restrictions on confidentiality of business information, or implementing new ones where none are currently in place.
We will provide further updates on the FTC’s proposed rule on non-competes. If you have questions about your current policies and practices to ensure compliance with existing Virginia, Maryland, or District of Columbia employment laws, please contact Doug Taylor, at email@example.com or (703) 525-4000.
This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the author and are not necessarily the views of any client.