FTC Bans Noncompete Clauses

The U.S. Federal Trade Commission has issued a final rule banning noncompete clauses nationwide.

Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date, which is 120 days after its publication in the Federal Register. Existing noncompetes for senior executives—less than 0.75% of workers—can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes. According to an FTC press release, estimated 30 million workers—nearly one in five Americans—are subject to a noncompete clause.

In a February 2023 letter to Congress, ISSA opposed the FTC’s proposed rule to impose a nationwide ban on noncompete clauses because, according to the coalition letter, the FTC “lacks the constitutional or statutory authority to issue such a rule and, in attempting to do so, the agency is improperly usurping the role of Congress.”

To learn more about this issue and ISSA advocacy, please contact ISSA Director of Government Affairs John Nothdurft.