FTC to Vote on Noncompete Rule on Tuesday

Well, if you were by your email at 2:31 PM ET today (I was not), you may have received the following email from the FTC stating, “Today, Federal Trade Commission Chair Lina M. Khan announced that a special Open Commission Meeting will be held virtually on Tuesday, April 23, 2024, at 2pm ET.”

The email also provided this link — FTC Announces Special Open Commission Meeting on Rule to Ban Noncompetes — with the following agenda:

Rule to Ban Noncompetes Clauses:

The Commission will vote on whether to issue a proposed final rule that would prevent most employers from enforcing noncompetes against workers. The proposed final rule being considered would generally prevent most employers from using noncompete clauses. As the Notice of Proposed Rulemaking explained, noncompetes are a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. The proposed final rule the Commission will consider stems from the notice of proposed rulemaking the FTC issued in January 2023, which was subject to a 90-day public comment period.

At the start of the meeting, the Commission will vote on whether to authorize public disclosure of the proposed final rule that is under consideration. Then, Chair Khan will offer brief remarks. Next, if the Commission votes to authorize public disclosure of the final rule under consideration, the Office of Policy Planning will give a staff presentation on the final noncompete rule under consideration. Finally, the Commission will vote on whether to issue the final rule.

After announcing the Notice of Proposed Rulemaking, the FTC received more than 26,000 comments from members of the public. Given the extremely high volume of public input already received and given that the public comment period on the proposed rule closed in April 2023, the Commission will not be taking further comments from the public during the April 23 Open Commission Meeting. The public, however, can watch the meeting via webcast, which will be available on the day of the event shortly before the meeting starts at FTC.gov. The event will be recorded, and the webcast will be available on the Commission’s website after the meeting.

Mark your calendars!

Predictions?

I continue to believe that the final rule will closely resemble the near-total ban on noncompetes that the FTC proposed last January (2023).

I could see are modest changes. For example, I could see an expansion of what qualifies for the sale-of-business exception and a presumption of unenforceability (as opposed to an outright ban) for noncompetes for high-level executives. That said, I highly doubt the latter.

We shall see!

Tuesday will be very interesting!