FTC Releases Draft Final Regulation on Regulatory Ban of Non-compete Clauses

On April 23, the Federal Trade Commission (FTC) voted to approve and release the draft of a Final Regulation that bans for-profit employers from using non-compete clauses. The rule becomes effective September 4, 2024, 120 days following its formal publication. National employer groups have already challenged the Final Rule in federal courts to block its implementation before the effective date. The preponderance of legal opinion is that this Rule will never go into effect: federal courts will ultimately overturn the rule because Congress has never given the FTC the authority to regulate employment contracts. Regardless of federal regulation, members should recall that many states regulate or limit the use of non-competes in employment contracts, particularly as applied to physicians. AAHKS members should consult local legal counsel for any questions over existing non-compete provisions in their contracts. It is not uncommon to discover that some contracts include non-compete provisions that are barred by applicable state law. For the full summary and to see the 2023 AAHKS Comment Letter and EBG’s 50-State Noncompete Survey, click here.