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FTC Proposes Rule that Could Ban Non-Compete Clauses

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FTC Proposes Rule that Could Ban Non-Compete Clauses

By The Employer Group - Feb 01, 2023

Yup, you read that right! This month, the Federal Trade Commission (FTC) proposed a rule that could ban employers from entering and enforcing non-compete clauses with their current and former employees. A non-compete clause is defined as a clause that prevents workers from working for a competitor during and/or after employment with their current employer.   

So, what does this mean moving forward? If the proposed rule becomes effective, employers will need to relinquish non-compete clauses with new employees and provide notice to employees who currently have a non-compete clause in place. You should note that non-disclosure and non-solicitation provisions will not be affected, as long as all post-employment restrictions are reasonable.  

Although the proposed rule, if passed, will not go into effect until late 2023, it is recommended that employers start thinking about having their agreements reviewed and/or updated, especially employers who currently have non-compete clauses in place.  

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