FTC Expects to Vote on Non-Compete Ban in 2024

In January of 2023, the Federal Trade Commission, or FTC, announced a proposed rule to ban non-competes “based on a preliminary finding that non-competes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act.”

The Fact Sheet released by the FTC stated “that noncompete clauses bind about one in five American workers, approximately 30 million people” and that they hurt workers and harm competition.” The Fact Sheet also discussed the impact that the ban could have on wages, stating that “the proposed rule could increase workers’ earnings across industries and job levels by $250 billion to $296 billion per year.”

According to the Fact Sheet, a vote on the rule in expected in 2024 and could possibly result in the following:

• “ban employers from entering noncompete clauses with their workers, including independent contractors.”

• “require employers to rescind existing noncompete clauses with workers and actively inform their employees that the contracts are no longer in effect.”

Bloomberg recently reported that the FTC “received nearly 27,000 comments on the draft rule” and that the “FTC had spent about $500,000 on the rulemaking effort by late February, according to a letter from the agency sent to House Judiciary Committee Chairman Jim Jordan (R-Ohio) that was obtained by Bloomberg Law under the federal Freedom of Information Act.”

Some states, like Massachusetts, Rhode Island, and Delaware were among the few to ban non-competes for doctors, stating that they were against public policy and harmed patients’ desire to maintain a relationship with doctors who had been treating them.

An article in RollCall.com recently reported that “because emergency physicians are increasingly employed by staffing firms — some which are owned by private equity firms — non-competes have become widespread in the specialty, said Jonathan Jones, president of American Academy of Emergency Medicine, which represents 8,000 emergency physicians.”

Jones went on to say that “a recent survey of AAEM’s members showed half of its members were in non-competes. Of those who had signed noncompete agreements, most were employed by staffing agencies, especially those owned by private equity firms.”

It is now expected that the FTC will vote on the ban in 2024.

Photo Credits: Photo by Thirdman, Photo by Andrea Piacquadio