As we last reported in March, the Federal Trade Commission’s (the “Commission’s”) final vote on its Proposed Rule to Ban Noncompetes (“Proposed Rule”) was slated to take place as early as April 2024. Today, the Commission announced that it will hold a Special Open Commission Meeting on its Proposed Rule starting at 2 p.m. Eastern Time on April 23, 2024.
At this Special Meeting, the Commission proposes to start by voting on whether to authorize public disclosure of the proposed final rule that currently is under consideration (after the Commission received more than 26,000 public comments following its Notice of Proposed Rulemaking). If that vote passes, the Commission’s Office of Policy Planning would give a staff presentation on the final noncompete rule under consideration and would vote on whether to issue the final rule. The Commission did not provide any details of the proposed rule under consideration, other than to say it “would generally prevent most employers from using noncompete clauses.” Particularly where the Commission’s authority to implement any such noncompete ban is in dispute, it is likely that whatever form of noncompete ban the Commission may vote to adopt will be promptly challenged in litigation.
Regardless, the Commission’s actions next week will provide yet another important consideration for employers to factor into their restrictive covenant practices and trade secret protection plans. We will continue to monitor this and other related developments.
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