Divided FTC Finalizes Rule to Ban Noncompete Agreements

Terrell McSweeny’s commentary was included in an article appearing in the National Law Journal article examining a new Federal Trade Commission (FTC) rule prohibiting employers from imposing noncompete agreements on their workers. Terrell provides her insight on how the final rule is “a very significant action.”

Terrell explains that “they’re using their authority under Section 5 of the FTC Act to police unfair methods of competition to promulgate this rule. And it’s an interesting, potential expansion of the FTC’s authority under this statute to use what we call the UMC, the unfair methods of competition, authority in this way.”

“It’s a historic action by the FTC, but it also has really wide-ranging implications for employers and employees,” she adds. “It will still essentially ban noncompete clauses and employment agreements for most employees, with some exceptions for senior executives that are pretty narrow. And, it will cover every part of the economy that the FTC has jurisdiction over.”