The extended comment period for the FTC’s sweeping proposal to ban non-competes has now ended. In total, the FTC received nearly 27,000 comments.
Coming in just under the wire was a letter penned by 18 state Attorneys General (including those from California, New Jersey, New York, and Washington DC) (see here: Microsoft Word – 2023.04.19 FTC Comment FINAL – CLEAN.docx) sent in support of the FTC’s proposed rule on the basis that a uniform, national standard will yield more predictable results, which in turn will benefit workers and employers.
The AGs offered a series of comments and recommendations, including:
- support for the “functional test” to reach provisions that are not “de facto” non-competes but operate similarly;
- a recommendation to clarify that the definition of “worker” to “account for the reality that in some instances, employers have used ‘franchisee’ status to misclassify employment relationships;”
- support for the current proposed rule’s non-imposition of an income threshold to determine which workers would be covered; and
- and recommendation to clarify that the proposed rule does not preempt state laws that provide similar or greater protections and does not preclude the concurrent enforcement of state laws.
Now that the comment period has closed, the FTC will review the numerous comments, including the AG’s letter, and consider whether to publish a final rule and, if so, whether that rule will feature any modifications to the proposed one. In the interim, companies should continue to closely monitor further FTC action in this regard and state-specific laws in jurisdictions in which they operate, many of which have significantly changed in the past few years.