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FTC Proposes Ban on Non-Compete Agreements

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The Federal Trade Commission (FTC) has proposed a new rule that would ban non-compete agreements between employers and workers, in most circumstances.

The proposal also would "require employers to rescind any existing non-compete agreements with current and former employees," according to SESCO Management Consultants, which adds that "the notice of proposed rulemaking also offers several potential alternatives to the proposed rule," including:

  • A categorical ban on non-compete agreements for employees earning below a wage threshold (e.g., $100,000) with no changes to the law of non-compete agreements for employees earning above that threshold;
  • A categorical ban on non-compete agreements for employees earning below a wage threshold (e.g., $100,000) with a rebuttable presumption that non-compete agreements are illegal for employees earning above that threshold;
  • No ban on non-compete agreements, but a rebuttable presumption that non-compete agreements are illegal for all employees; or
  • No ban on non-compete agreements, but a rebuttable presumption that non-compete agreements are illegal for employees earning below a wage threshold (e.g., $100,000), with no changes to the law of non-compete agreements for employees earning above that threshold

SESCO officials say the FTC's notice of proposed rulemaking "is just the first step" in its efforts to establish the new rule.

"Comments on the proposed rule are due 60 days after the FTC publishes the proposed rule in the Federal Register. Afterward, the FTC can finalize the rule based on input received from the public. It is not clear how long the FTC would take to finalize the rule -if it does finalize the rule.

"As the proposed rule is currently drafted, the FTC has indicated that, if it proceeds to finalize the rule, it will then set a compliance date of 180 days after it publishes the final rule in the Federal Register. Thus, the earliest the proposed rule could go into effect is 240 days after the FTC publishes the proposed rule in the Federal Register."

For more information from - and about - SESCO Management Consultants, click here.

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