On Jan. 5, the Federal Trade Commission (FTC) issued a proposed rule that would prohibit employers from including provisions in contracts with workers that prevent them from leaving to work for a competitor or starting a competing business after their employment (referred to as noncompetes). The rule would not apply to employers that are nonprofit entities.
The law defines workers as including employees, independent contractors, apprentices, externs, interns, and volunteers. If finalized, employers (as defined in the rule) would be prohibited from entering into a noncompete agreement with a worker and required to rescind all existing noncompete agreements.
The public may submit comments in response to the proposed rule by March 6. Legal challenges to the proposed rule are anticipated.