FTC to Review Non-Compete Issues on a Case-by Case Basis

During the Biden administration, the Federal Trade Commission (FTC) issued and extensive set of rules governing non-compete agreements in all industries.  Later, a federal district court struck down the rules holding that the FTC lacked the authority to adopt general rules on this issue.  The Trump administration’s FTC has decided not to appeal that decision. Rather than adopting a general rule, the FTC stated that it will consider these issues on a case-by-case basis. 

 In addition, the FTC opened a proceeding to obtain more evidence about the use of non-compete agreements.  It noted:

“The Federal Trade Commission invites public comment to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.”

In soliciting additional comments the FTC stated:

“While noncompete agreements can serve valid purposes in some circumstances, available evidence indicates that they are often subject to abuse. In many cases, employers appear to impose noncompete agreements as a matter of course, simply inserting them into employment contracts without due consideration to whether the noncompete agreement is appropriate under the circumstances, including whether alternative contract terms would sufficiently advance procompetitive aims without or with less attendant anticompetitive harm."

Thus, while the issue remains open, it seems the FTC will not be moving forward with any major changes.  Since 2008,  stations in New York are prohibited from using post term covenants not to compete for their employees.  The limitations found in NY Labor Law, §  202k, do not apply to contracts with managers.

You can access the FTC’s decision not to appeal the case here.

You can access the FTC’s request for more information here.