We’re currently monitoring the Federal Trade Commission’s proposed rule that would ban the use of noncompete agreements with workers nationwide, including with independent contractors. If the rule becomes final, existing noncompete agreements will have to be rescinded within 180 days, and employers will have to send individual notices to their current and former workers that the noncompete is no longer in effect. The proposed rule is expected to be widely challenged, but it’s definitely one to keep an eye on.
In January 2023, the FTC announced a rule proposal to retroactively ban noncompete agreements with all workers nationwide. (Note: The proposed ban would not eliminate noncompetes in most business purchase agreements.) Specifically, the proposal would mean that businesses would no longer be able to restrict former employees from going to work for competitors or starting their own competing business. The FTC has even estimated that banning noncompetes would double the number of companies founded by former employees. Even attempting to get a worker to sign a noncompete agreement would violate the FTC’s proposed rule.
The FTC’s proposal is a long way from becoming the law of the land. And any final rule could look very different from what has currently been proposed. The FTC is currently seeking comment on a number of closely related issues, such as whether the proposed ban should apply to franchisees, senior executives, or other highly paid workers.
Until then, Ohio law permits noncompete agreements as long as they are reasonable:
If you have questions about your company’s noncompete agreements or other ways of protecting confidential and proprietary information, please schedule a consultation below.