The FTC issued a notice of proposed rulemaking that will affect the employment relationships of approximately 30 million workers.

The FTC is seeking to ban non-compete clauses, defined as a contractual term preventing a worker from seeking or accepting employment with a person, or operating a business. The proposed rule defines worker broadly, encompassing employees and independent contractors.

The rule will also require employers to rescind existing non-compete clauses within six months of its finalization. Employers will have to notify current and former workers with non-competes that the clause is no longer in effect.

The rule will not prevent employers from enforcing reasonably restrictive trade secret agreements, non-solicitation agreements, and non-disclosure agreements to protect their investments. However, it does not adequately define these agreements.

The FTC has opened a sixty-day comment period on the proposed rule; SCI encourages you to let your voice be heard. To leave a comment, visit regulations.gov.

For more detailed information, click here.

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