FTC Proposes Rule Banning Noncompete Clauses January 19, 2023

Written by MSDC Staff

On Thursday, the Federal Trade Commission released an anticipated rule that would ban noncompete clauses nationwide.

The new rule would make it illegal for an employer to enter into or maintain a noncompete with a worker, or represent to a worker that the worker is subject to a noncompete. It would also require employers to rescind current noncompetes.

The Commission has opened the rule's comment period through March 10, 2023 after which time it will issue a final rule. You can submit a comment here.

DC had a new noncompete law go into effect this past year. You can read an analysis of the law by MSDC's law firm Whiteford Taylor Preston here. Generally the law did not apply to physicians due to income ceilings. MSDC took no position on the legislation after consideration by the MSDC Advocacy Committee and MSDC Board. However, MSDC did and continues to provide information and resources on the law.

The American Medical Association issued the following statement on the FTC proposed rule:

The AMA appreciates the Federal Trade Commission's examination of noncompete agreements in the workplace. While the AMA's membership has diverse perspectives on noncompetes—with some members in an employer/practice ownership role and some in an employee role—AMA ethics policy opposes unreasonable noncompetes. Many states have enacted negotiated health care-specific noncompete statutes that take into account their unique health care markets and that balance the competing stakeholder interests. The balanced approach of these states must be considered against a proposed universal federal ban on all noncompete agreements.

The Washington Business Journal does note that the proposed regulations may exempt some nonprofit entities. Thus physicians working for a not-for-profit health system may not fall under the rule's purview.