FTC Bans Noncompete Clauses

The U.S. Federal Trade Commission has issued a final rule banning noncompete clauses.

Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date, which is 120 days after its publication in the Federal Register. Existing noncompetes for senior executives—less than 0.75% of workers—can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes. According to an FTC press release, estimated 30 million workers—nearly one in five Americans—are subject to a noncompete clause.

In a February 2023 letter to Congress, ISSA opposed the FTC’s proposed rule to impose a nationwide ban on noncompete clauses because, according to the coalition letter, the FTC “lacks the constitutional or statutory authority to issue such a rule and, in attempting to do so, the agency is improperly usurping the role of Congress.” The FTC received more than 26,000 public comments in the months leading up to the vote, according to NPR.

The U.S. Chamber of Commerce has said it will sue the FTC to block the rule for what it views as the agency exceeding its administrative authority, CNN reported.

To learn more about this issue and ISSA advocacy, please contact ISSA Director of Government Affairs John Nothdurft.