On January 5, 2023, the U.S. Federal Trade Commission (FTC) issued a notice of proposed rulemaking under the FTC Act with far-reaching implications for U.S. employers. If enacted and enforced, the proposed rule would prohibit employers from entering noncompete clauses with workers, and require employers to rescind existing noncompete clauses and actively inform their current and former workers that existing noncompete clauses are no longer in effect. The proposed rule also would prohibit contract terms that amount to “de facto” noncompete clauses, but would provide a narrow “sale of business” exception to the prohibition on noncompete clauses if the worker subject to the clause is at least a 25% owner, member or partner in the applicable business entity at the time the worker enters into
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