ACEC Submits Comments on Proposed Noncompete Ban

Advocacy

April 11, 2023

ACEC Submits Comments on Proposed Noncompete Ban

The Federal Trade Commission (FTC) has proposed banning noncompete agreements in most cases and rescinding existing agreements. ACEC submitted comments seeking improvements in the rule to balance the concerns of employers and employees.

A noncompete agreement is a contract in which an employee agrees not to work for a competitor, often within a certain geographic area, for a period of time after leaving their employer. The FTC proposal would ban noncompetes except in the case of an individual who owns at least 25 percent of a firm that is being sold. Existing noncompete agreements would have to be rescinded and employers would have to actively communicate that to their employees and former employees that have signed the agreements.

ACEC members have varying practices in the use of noncompete agreements. The Council recommended that the FTC modify its rule to allow noncompetes for any firm owner, clarify when other restrictive covenants such as nondisclosure or customer nonsolicit agreements are allowed, and make the ban prospective instead of retroactive.

A final rule is expected later this year and legal challenges to the rule are anticipated.

View ACEC comments on the proposed non-compete rule.

All comments to blog posts will be moderated by ACEC staff.