Proposed FTC Rule to Outlaw Non-compete Agreements

The Federal Trade Commission (FTC) published a proposed rule on January 5, 2023, that would make existing and future non-compete agreements illegal. The FTC says that around 30 million people in the United States are bound by non-compete clauses which restrict their ability to pursue better employment opportunities.

A non-compete agreement is a contract, called a restrictive covenant, that restricts an employee from working for a business or starting a business that does the same kind of work as the worker’s previous employer. These agreements often apply regardless of whether one leaves an employer voluntarily or is terminated.

The FTC says these agreements unfairly limit workers’ ability to earn a living and amount to an “unfair method of competition.” This rule, if it becomes an official regulation, will make existing non-compete agreements unenforceable and employers will have to notify their employees that their non-compete agreements are no longer valid within 180 days of the rules formal publication. It will also make it illegal to enter into new non-competes with employees.

The rule will not bar non-compete agreements for persons who are selling a business.

Right now, in South Carolina, non-compete agreements are enforceable if the employee got something of value for signing the agreement (called consideration), if they do not violate South Carolina public policy, and if they are reasonable as to their geographic reach, duration in time, and scope of work.

CBPH is experienced in assisting employees and former employees in reviewing restrictive covenants and in protecting them from claims they violated non-compete agreements. We are paying close attention to the rule-making process and will update here as significant developments occur.

Cheers, Paul

Welcome to the CBPH Employment Law Blog!

Starting this year, with the rollout of our new website, the attorneys and professional staff at CBPH will make regular blog posts on this site to keep our peers, clients, and the community at-large up-to-date on news and developments in the law that relate to our practice areas.

This includes developments in employment discrimination law, legal issues concerning claims of sexual assault and sexual harassment, women’s rights more broadly, business law, wrongful termination law, government employee rights, and relevant new case law at the South Carolina Supreme Court, South Carolina Court of Appeals, and Federal Appellate Courts.

Our particular focus will be developments in the law or related current events that impact South Carolina workers and small businesses.

We will also keep you updated on important events and news concerning our lawyers and staff.

If you have questions about any of our posts, feel free to leave a comment on the post. We want this site to serve as an interactive hub for discussing cutting edge legal issues in our practice areas!

This blog is a blog. It does not create an attorney-client relationship, and it’s content is not individualized advice. CBPH does not have an attorney-client relationship with you unless you have a retainer with us.

Cheers, Paul

Cromer, Babb, Porter, & Hicks, LLC.
Attorneys and Counselors at Law

1418 Laurel Street, Suite A
Columbia, SC 29201
803.799.9530
info@cbphlaw.com

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