FTC Considers Rulemaking to Restrict Use of Non-Compete Clauses in Employment Contracts

Last Updated: Feb 11, 2020

non-compete-agreementOn Jan. 9, 2020, the Federal Trade Commission (FTC) held a public workshop to consider whether to initiate rulemaking that would restrict the use of non-compete clauses – also known as restrictive covenants – in employment contracts.

Employers in many industries, including health care, use non-compete clauses to prohibit employees from working for a competitor within a certain time period and/or within a certain geographic radius.

How to Submit Feedback on Non-Compete Clauses

Now, the FTC is calling for public comments on non-compete clauses. Comments are due by March 11, 2020. 

Comment Here 

The FTC is asking for public response to questions such as:

  • What impact do non-compete clauses have on labor market participants?
  • What are the business justifications for non-compete clauses?
  • Is state law insufficient for addressing harms associated with non-compete clauses?
  • Do employers enforce non-compete agreements contained in standard employment contracts? How routine is such enforcement?
  • Are there situations in which non-compete clauses constitute an unfair method of competition or an unfair or deceptive act or practice? How prevalent are these situations?
  • Should the FTC consider using other tools besides rulemaking to address the potential harms of non-compete clauses, such as law enforcement, advocacy, or consumer/industry guidance?

Find more information about the FTC’s non-compete clause workshop and call for comments here.

Pennsylvania Bills Addressing Non-Compete Clauses

In March 2019, Rep. Anthony DeLuca introduced two bills that aim to restrict the use of non-compete clauses in the state:

  • House Bill 601 addresses non-compete clauses in physician contracts. It would prohibit a contract or agreement “that creates or establishes the terms of an employment relationship with a health care practitioner that includes a restriction of the right of the health care practitioner to practice in a geographic area for a period of time after the termination of the employment relationship or prohibits a health care practitioner from treating a prior patient.”  The bill has been referred to the House Health Committee.
  • House Bill 597 would prohibit restrictive covenants for employees who work for purely public charities. This bill has been referred to the House Finance Committee.

PAMED supports both bills. We are continuing to monitor their status and will share any updates when available. 

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