What Employers Should Know About the FTC’s Proposed Ban on Non-Compete Provisions

Non‑compete provisions and other restrictive covenants have long been tools used by employers to protect confidential information and trade secrets, valuable client relationships, and goodwill. On January 5, 2023, the FTC announced its intention to effect a sea change in this area, issuing a Notice of Proposed Rulemaking (Proposed Rule) that, if implemented, would prohibit the use of non-compete clauses with employees in virtually all circumstances. In this guest article, Dechert attorneys J. Ian Downes and Jeffrey W. Rubin discuss the FTC’s Proposed Rule, the backdrop against which it was raised, the challenges to enactment of the Proposed Rule in its current form, and the steps that employers should consider now in the face of legal headwinds that, at the very least, seem likely to lead to increasing scrutiny of the use of restrictive covenants. See “The Impact of New York City’s New Wage Transparency Law on Hiring” (Mar. 1, 2023).

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