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FTC Issues Ban on Noncompete Agreements — but Experts Say Rule Will Face Legal Challenges
The FTC issued a rule banning noncompete clauses in most U.S. employment contracts. But it's expected to be challenged in court.
“The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business or bring a new idea to market.” “Everybody can take a breath, as the FTC vote may not impact business today or even tomorrow, because we expect legal challenges that delay implementation,” said Heather Weine Brochin, chair of the employment and labor practice at law firm Day Pitney. The commission said employers have several alternatives to noncompetes that still “enable firms to protect their investments without having to enforce a noncompete.” The FTC cited trade secret laws and non-disclosure agreements (NDAs) as both providing employers with “well-established means to protect proprietary and other sensitive information.” The agency also cited research estimating that over 95% of workers with a noncompete already have an NDA.
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