On January 5, 2023, the Federal Trade Commission (“FTC”) released a Notice of Proposed Rulemaking aimed at preventing employers from imposing non-compete clauses. If you are an employer or employee and have questions about non-compete contract provisions, our lawyers at Lardiere McNair DiNicola & Stonebrook Ltd., LPA can help you navigate your issues. The FTC argued that these clauses significantly reduce workers’ wages, stifle new businesses and new ideas, exploit workers, and hinder economic liberty. As expected, the proposed rule is already becoming the subject of opposition. The principal allegation is that the FTC lacks the authority to promulgate such a competition rule, not to mention the estimated economic impact of $296 billion.
 
However, if the FTC rule is put into effect, this is what employers should expect: 

• Employers would be banned from entering into noncompete clauses with their workers, including independent contractors;
• Employers would be prevented from representing to a worker, under certain circumstances, that the worker is subject to a noncompete clause; 
• Employers would be required to take action to rescind the non-compete clauses within a certain timeframe, through individualized communications from the employer to all current employees, as well as former employees.

What can you do for your business now?

 
The FTC rule is not final, as the agency is seeking public comments on a variety of topics until March 20, 2023. Nevertheless, businesses should be prepared. In addition to submitting comments to the FTC, it would be prudent to start gathering all noncompete, nondisclosure, confidentiality, and no solicitation agreements, and consider reaching out to an attorney to: 

• Monitor and keep you updated as things rapidly change;
• Help your business comply with the potential new rules, the required actions, and advise on possible exceptions; 
• Review all your existing agreements, particularly if they do not contain certain clauses, as it could void the entire agreement;
• Draft new agreements to ensure compliance and avoid legal battles.

 
At Lardiere McNair DiNicola & Stonebrook Ltd., LPA, our attorneys have extensive experience and will collaborate with you to effectively advise you on all business law matters, including formation of your business and general representation. Please Call (614) 534-1355 and schedule a free consultation. 
For more information visit:
https://www.ftc.gov/system/files/ftc_gov/pdf/p201000noncompetenprm.pdf

Aline Wright is a Legal Assistant at Lardiere McNair DiNicola & Stonebrook, Ltd., LPA.  To read more about our firm, please visit lawyerscolumbusohio.com.

The information presented here has been prepared by Lardiere McNair for promotional and informational purposes only and should not be considered legal advice.  This information is not intended to provide, and receipt of it does not constitute, legal advice.  Nor does the receipt of this material create an attorney/client relationship.  An attorney client relationship is not established until such time as Lardiere McNair enters in to a written engagement agreement with a specific client for a specific legal matter.