On April 23, 2024, the Federal Trade Commission (“FTC”) will vote on whether to issue a final rule that will prohibit organizations from enforcing non-compete agreements with current and former workers. The vote will take place during a virtual Special Open Commission Meeting held open to the public.
The FTC’s vote comes more than one year after issuing its notice of the proposed rule on January 5, 2023. As we previously noted, the FTC’s proposed rule argues that most non-compete agreements are an unfair method of competition under Section 5 of the FTC Act (15 U.S.C. § 45).
The FTC held the proposed rule open for public comments through April 19, 2023. By now, the FTC has reviewed the nearly 27,000 comments received during this period in preparation for voting on the finalized non-compete rule.
As of this writing, the terms of the final rule receiving an FTC vote have not yet been disclosed to the public. The FTC’s announcement of the Open Commission Meeting states “the proposed final rule being considered would generally prevent most employers from using noncompete clauses.” Although somewhat ambiguous, this language suggests the FTC will vote on a modified version of the non-compete rule.
The Special Open Commission Meeting will begin with the FTC voting on whether to authorize public disclosure of the proposed final rule now being considered. This initial vote will be followed by brief remarks from the FTC’s Chair, Lina M. Khan. If the FTC votes to authorize public disclosure, the FTC’s Office of Policy Planning will furnish a staff presentation on the parameters of the final rule. Finally, the FTC will vote on the ultimate decision to issue the final rule.
Even if the FTC votes in favor of issuing the final non-compete rule, it is likely the rule will face numerous and immediate legal challenges. Although such challenges could enjoin the FTC from enforcing the rule pending the resolution of litigation, numerous states, including New York, are still actively considering their own prohibitions on non-compete agreements.
Businesses should closely monitor the FTC’s and other government regulators’ non-compete initiatives. Harris Beach will continue to provide updates and information as it becomes available.
Should you have questions about any of these developments or navigating changes to non-competes, please feel free to reach out to attorney Daniel J. Moore at (585) 419-8626 and dmoore@harrisbeachmurtha.com; attorney Scott D. Piper at (585) 419-8621 and spiper@harrisbeachmurtha.com; attorney Ibrahim Tariq at (585) 419-8556 and itariq@harrisbeachmurtha.com; or the Harris Beach attorney with whom you most frequently work.
