Policy Backgrounders

FTC Proposed Rule on Worker Noncompete Agreements

January 13, 2023

The Federal Trade Commission (FTC) opened the year with a major development: proposing a far-reaching ban on non-compete agreements in employee contracts. The Notice of Proposed Rulemaking followed a set of decisions that, for the first time at the national regulatory level, preliminarily found the noncompete practices of three companies to be illegal as “an unfair method of competition.” FTC’s authority to rule on the practice comes directly from policy guidance the agency published in November that expanded what the agency considers as a “method of competition” under Section 5 of the Federal Trade Commission Act. The move is the latest in a series by antitrust regulators and state attorneys general addressing labor practices that may be stifling competition – a priority of the Administration outlined in a 2021 Executive Order on “Promoting Competition in the American Economy.”