As previously noted in our Coolidge Wall blog (https://www.coollaw.com/blog/2023/01/ftc-proposes-rule-to-ban-noncompete-clauses/), on January 5, 2023, the Federal Trade Commission (FTC) released a Notice of Proposed Rulemaking called the “Non-Compete Clause Rule” (the “Proposed Rule”). The Proposed Rule would prohibit employers in most industries from executing or maintaining noncompetition agreements with their employees and other workers. This exercise of executive branch power would interfere with the ability of companies and individuals to enter contracts, in the name of preventing “restraints on trade.” The Proposed Rule would literally void noncompetition agreements already in existence, and it would, we predict, have enormous unintended negative consequences for the economy. The 216-page Proposed Rule can be found here: https://www.regulations.gov/document/FTC-2023-0007-0001.
The FTC has called for interested parties to submit comments on the Proposed Rule, which will be accepted until March 20, 2023, and it will publish a final rule shortly thereafter. While public comments may address any aspect, the FTC specifically asks for comments on a number of alternatives suggested for the Proposed Rule, including (1) whether the rule should ultimately impose a categorical ban on noncompetition clauses or merely a rebuttable presumption of unlawfulness, and (2) whether the rule should apply uniformly to all workers or whether there should be exemptions or different standards for different categories of workers (such as, for example, senior executives versus lower wage employees).
Coolidge Wall’s Labor & Employment Department will be submitting a formal comment addressing the Proposed Rule. This year marks the firm’s 170th anniversary of providing guidance, representation, and litigation services for employers in Dayton, the Midwest, and throughout the United States. From this unique platform, we hear from hundreds of business clients in diverse industries about the utility and necessity of investing in employee recruitment and training. Reasonable noncompetition agreements are vital to a functioning economy. Our clients risk their capital every day to build their businesses – which, in turn, creates jobs and lifts the economy as a whole. While noncompetition agreements obviously need to be reasonable, and unreasonable restrictions deserve to be challenged, we know many of our clients would view a wholesale elimination of this business tool as overkill.
Coolidge Wall wants our comment to reflect and to amplify the voices of the people and industries we represent. We will present logical and informed commentary, based on our experience with businesses and drivers of the economy: in short, we welcome your input. While you are also invited to respond directly on the FTC’s website (here: https://www.regulations.gov/commenton/FTC-2023-0007-0001), we hope you will share your opinions and experiences with us, so that we can incorporate them (anonymously, unless you specify otherwise) into our comment as well.
Please provide your submissions to (or to any of our attorneys) by March 10, 2023, in order to have them incorporated into our timely comment to the FTC.
Marc L. Fleischauer, Esq.
Chair, Labor & Employment Department
Coolidge Wall Co., LPA
