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The Federal Trade Commission Weighs A Ban On Non-Compete Clauses In Employment Contracts

(Rodnae Productions)
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WASHINGTON D.C. (CelebrityAccess) — In a move that could impact the agency business, the Federal Trade Commission proposed a new rule that would ban employers from imposing noncompete clauses in contracts with workers.

“The freedom to change jobs is core to economic liberty and to a competitive, thriving economy,” said Chair Lina M. Khan. “Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand. By ending this practice, the FTC’s proposed rule would promote greater dynamism, innovation, and healthy competition.”

Under the terms of the new rule, employers would be prevented from entering or attempting to enter into a noncompete agreement with workers; maintaining an existing noncompete agreement with a worker, or represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and to notify workers that the noncompete agreement still applies.

While the proposed rule would not generally apply to other types of employment restrictions, such as non-disclosure agreements, employers would be prohibited from creating restrictions that are so broad that they function as noncompete agreements.

The FTC is currently seeking the public’s input on the proposed rule and may implement changes to the proposed rules based on feedback.

Comments will be due 60 days after the Federal Register publishes the proposed rule. The public comment period will be open soon.

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