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FTC Proposes Rule Banning Non-Compete Agreements with Employees

On January 5, 2023, the Federal Trade Commission issued a Notice of Proposed Rulemaking that seeks to ban employers from imposing or enforcing non-compete clauses as an “unfair method of competition.” See 16 CFR Part 910. The Notice follows President Joe Biden’s July 2021 Executive Order encouraging the FTC to exercise its statutory rule-making authority under Section 5 of the FTC Act “to curtail the unfair use of non-compete clauses.” The FTC Commissioners voted 3-1 in favor of the proposed rule, with Commissioner Wilson dissenting that the proposed rule exceeds the FTC’s authority, conflicts with existing precedent and is not supported by an adequate factual record.

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