The Broad Impact of The FTC Noncompete Proposed Rule

In January 2023, the Federal Trade Commission released a proposed rule that is making waves in the business and legal communities. The proposed rule would make it illegal for employers to enter into noncompete agreements with workers in most circumstances and would also require employers to rescind existing noncompete provisions.

The FTC is currently accepting public comments about the proposed rule and conducting listening sessions and the FTC has asked for feedback on ways in which the final rule may be narrowed or expanded.     

Holden Brooks, Partner at McGuireWoods Antitrust Group, sits down with McGuireWoods’ Geoff Cockrell to explore the potential ramifications of a noncompete ban, potential legal challenges to the rule and the scope of the FTC’s rulemaking authority, what to watch in the ongoing debate surrounding the scope of the rule, and what alternative tools to consider in order to protect your business interests in the event that the rule goes into effect. 

Featured Guest

Name: Holden Brooks

What she does: As a Partner in McGuireWoods Antitrust Group, Holden focuses on mergers, complex litigation, civil and criminal enforcement, and counseling across several industries with a focus on Healthcare.

Organization: McGuireWoods

Words of wisdom: “[The FTC] are charged with this and they have a real responsibility to pursue this. So I think this is sort of the best part of democracy, in a way. We have an opportunity to speak up, to deliver thoughtful comments to this body, and to also have our courts consider whether this is the way that things should play out, whether this is the right way to make policy.” 

Connect: LinkedIn 

Notes From the Professor’s Corner

Top takeaways from this episode

• Most workers would be affected by the potential rule.  This includes sophisticated, high-earning employees with a great deal of leverage in employment negotiations as well as lower-wage workers with no leverage.  Watch for some narrowing in the final rule in this area.
• There will be substantial legal challenges.  Many groups have promised to bring legal challenges to the rule if it is adopted, which could delay the need to comply with the rule for a substantial period of time.  Watch for these to go right up to the U.S. Supreme Court.
• What constitutes a noncompete?  One area to watch as the rule is finalized is what the FTC will consider to be a noncompete covered by the rule.  Will it only be traditional restrictive covenants that are affected, or “de facto” noncompetes as well?

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