Federal Trade Commission will vote on banning non-compete agreements
On Tuesday, April 23, 2024, the Federal Trade Commission will hold a special Open Commission Meeting to vote on whether to issue a proposed final rule preventing most employers from enforcing non-compete agreements. On January 19, 2023, the FTC published a Notice of Proposed Rulemaking in the Federal Register, 88 FR 3482. The FTC’s position is that that non-competes are an “exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new business.”
If the final rule retains the key provisions of the proposed rule, lawsuits to stop the final rule are virtually certain. The U.S. Chamber of Commerce announced its intention to sue to stop the final rule. The group opposed the proposed rulemaking as failing to recognize non-competes’ role in protecting investments in research and development and employee training. The U.S. Chamber of Commerce argues, among other things, that the FTC lacks legal authority to issue the final rule.
We are monitoring FTC developments. Wisconsin employers should note that 2023 Assembly Bill 481 and 2023 Senate Bill 566 prohibiting revised or new post-employment non-competes failed to pass in the Wisconsin Legislature. Wisconsin employers should keep informed on this developing issue.
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