Legislative Affairs Updates – What You Should Know
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The Federal Trade Commission (FTC) proposed a new rule that, if made final, would (at least on its face) effectively prohibit non-compete agreements other than in very limited circumstances. The proposed rule, which would supersede all contrary state laws, is remarkable for its sweeping definition of “non-compete clauses” that fall within the ban. The ban would extend to “de facto” non-compete clauses — i.e., contractual provisions that have the effect of prohibiting workers from seeking or accepting employment or operating a business after the conclusion of the worker’s current employment. In this regard, the ban may implicate broadly drafted non-disclosure of confidential information restrictions and repayment of training costs provisions. The ban could also implicate non-solicitation of customer restrictions, depending on the surrounding facts.