On Friday, July 9, 2021, President Biden issued a sweeping executive order that asked the Federal Trade Commission (“FTC”) to develop new regulations that ban or limit noncompete agreements.
The request has no immediate impact on existing noncompete agreements, but employers should expect new regulations in the coming months.
In the meantime, many questions remain for employers to consider:
- Will the FTC ban noncompete provisions outright, or will it limit their use with only “low-wage” workers?
- What would constitute a “low-wage” worker?
- Will the FTC regulations create new penalties against companies who seek to use non-compete agreements?
- Can the regulations have retroactive effect?
- Will other types of restrictive covenants (including confidentiality or non-solicitation provisions) be excluded from any order?
I, along with my colleagues Glenn Cunningham, Peter Murphy, Sarah Niemiroski have published a full alert on our firm’s website here and we will be monitoring the Administration’s actions closely in the coming months.
We will provide additional guidance when new regulations are announced.
In the interim, employers should ensure that any noncompete agreements that are currently being utilized or contemplated are in compliance with new state laws–many of which already address the questions being considered by the FTC.