Conn Maciel Carey Submits Comments to the FTC Urging it to Revise the Proposed Rule Banning Non-Compete Clauses

On April 19, 2023, Conn Maciel Carey LLP’s Labor & Employment partners, Kara Maciel and Jordan Schwartz, submitted public comments on behalf of a diverse coalition of employers urging the Federal Trade Commission (“FTC”) to revise its Proposed Rule banning non-competition clauses. While we believe that the FTC does not have legal authority to promulgate the Proposed Rule in its current form, the coalition’s comments focused on three problematic portions of the Proposed Rule and proposed the FTC revise it in three primary respects:

  1. The Proposed Rule’s exception in the sale of business context should not be limited to individuals with at least a 25% ownership/partnership interest, but rather should apply to all individuals who are selling a business entity or otherwise disposing of their ownership interest in the business entity.
  2. The Proposed Rule should not be retroactive because doing so is inherently unfair to all parties who have lawfully entered into contracts, both in the sale of business and employer/employee contexts and will lead to increased litigation and mass uncertainty.
  3. The Proposed Rule should exclude executives, highly paid employees, highly skilled employees, and those with access to a company’s confidential information.