FTC Votes to Ban Non-Competes

The Federal Trade Commission (FTC) voted 3-2 yesterday to ban non-compete agreements in most circumstances. The final rule would ban new noncompete agreements for workers while also requiring companies notify current and past employees that existing non-competes won’t be enforced.  In a change from the proposed rule, the final rule would allow non-compete agreements to remain for senior executives, who are defined as “workers earning more than $151,164 annually who are in a “policy-making position.”
 
In April 2023, ASA submitted comments to the FTC calling for states to develop and apply regulations that would outlaw unreasonable and egregious non-compete agreements. In March 2023, more than 300 anesthesiologists responded to an informal ASA survey on how non-competes affected their careers, with a majority describing how non-competes limited their career progression, affected their wages, and led many anesthesiologists to seek employment in locations far from their previous job.  In the comments to the FTC, ASA used these survey responses to describe the variety of non-compete clauses to the FTC, including how a one-size-fits-all approach to banning non-competes would fail to address the nuances of a complex health care system.
 
The new rule is set to go into effect 120 days after it is published in the Federal Register, although legal challenges are expected.
 
Read ASA’s comments here.
Read the FTC’s press release here.
Read the Final Rule here.