What Is Next For The Federal Trade Commission’s Non-Compete Rule?

As Connecting the Dots has reported several times over the last three months, in January 2023, the U.S. Federal Trade Commission (FTC) issued a notice of proposed rulemaking (NPRM) to ban non-compete clauses and asked for the public to comment on the proposal.

Specifically, the proposal would impose a blanket ban on all non-compete clauses and would apply that ban retroactively to all existing agreements. It also could extend to other covenants like non-disclosures and non-solicitations if they are deemed to be overly broad in scope.

The Metals Service Center Institute (MSCI) opposed the draft rule and on April 17 joined comment letter  to the FTC with the U.S. Chamber of Commerce and nearly 300 other organizations from 45 states outlining why the FTC should abandon this proposed rule. As the letter explained, non-compete agreements serve vital business and employee interests and also serve pro-competitive interests.

Now that the public comment period has closed, what comes next? The FTC will consider the input it received on the NPRM and will, most likely, move forward with a final rule that resembles what was proposed in the months ahead. There has been some speculation, however, that the FTC may narrow the proposed regulation by exempting certain highly-compensated employees from the ban.

Stay tuned to Connecting the Dots as this story develops.