May 30, 2023

Businesses Continue to Oppose Rule Change that Would Threaten Proprietary Information

It appears the Federal Trade Commission (FTC) will hold off on voting on whether to ban most types of non-compete agreements between employers and employees until next year.

Earlier this month, Bloomberg reported that the regulatory agency is expected to wait until April 2024 to vote on a final version of the non-competes ban. In January, the FTC proposed a new rule that would generally prohibit employers from using non-compete clauses by making it illegal for an employer to enter into a non-compete agreement with a worker, maintain a non-compete with a worker or represent to a worker that they were subject to a non-compete. The agency has said the prohibition is necessary to expand the career opportunities of 30 million Americans and that it could lead to wage increases of nearly $300 billion annually – although it has not provided information on how it came to those numbers.

The move was quickly opposed by business groups and trade associations, including FEDA, over its broad implications and because it would damage employers’ ability to protect proprietary business information and trade secrets. Further, business organizations believe the move would overstep the FTC’s constitutional and statutory authority while usurping Congress’ legislative role.