Earlier this month, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking for its proposed rule that would essentially prohibit employers from entering into noncompete agreements with any employee, as well as with independent contractors, interns, volunteers, and other types of workers. The proposed rule would require employers to withdraw any existing noncompete agreements and inform employees that noncompete agreements no longer apply. The proposed rule would also make it unlawful for an employer to enter into a noncompete agreement with an employee, to attempt to enter into such an agreement with an employee, or to suggest that an employee is bound by a noncompete agreement when the employee is not.
While the FTC may justify this proposed rule as necessary to allow workers to move freely without restrictions, we believe that this rule, if passed, would severely compromise a company’s ability protect its trade secrets and other confidential information, and could negate a company’s significant investment in valuable investments in its employees, including employee training. Indeed, there are countless reasons why a narrowly tailored noncompete agreement is a necessary tool that has been, and should continue to be, in an employer’s arsenal to protect its significant investment in its employees and the information to which they are privy.
The rule is currently open for comment. To that end, Conn Maciel Carey LLP is organizing a new fee-based coalition of employers and trade groups to advocate for the most reasonable FTC rule possible, with the goal of helping to shape any rule that the FTC ultimately promulgates in such a way that the rule is palatable to employers. We would be honored to partner with your organization in this endeavor. Continue reading