FTC Proposes the End of Employment-Based Non-Compete Agreements

Summary

The federal government just announced a proposed rule which would ban non-compete agreements between nearly all employers and all workers — employees, independent contractors, externs, interns, volunteers, apprentices, and even sole proprietors who provide a service to a client or customer. When announcing the new proposed rule this morning, the Federal Trade Commission (FTC) stated the widespread use of non-competes agreements is an "often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses." Indeed, the agency estimates about one in five employees across the country are subject to some form of non-compete agreement. By announcing this proposed rule, the FTC believes it will increase wages by almost $300 billion per year and help 30 million Americans expand their career opportunities. What do employers need to know about this dramatic development?