The deadline is extended by 30 days to April 19, a halfway point between the industry’s request and the FTC’s initial decision.
03/06/2023 4:25 P.M.
2.5 minute read
The Federal Trade Commission has extended the public comment period for a proposed rule that seeks to ban employers’ noncompete agreements and rescind existing agreements in an effort to increase wages and expand career opportunities for U.S. workers.
The comment deadline is now April 19, 2023, instead of March 20.
In March, trade associations representing several industries, including ACA International, requested that the FTC extend its comment period on a proposal to ban employers’ noncompete agreements by 60 days, ACA previously reported.
The organizations seeking an extension of the FTC’s comment period by 60 days said the extra time is needed to assess the potential consequences of the rulemaking and develop insightful comments, according to the request (PDF).
According to a client alert from Brownstein Hyatt Farber Schreck, the variety of impacted entities could cause thousands of comments to be submitted to the FTC, which could delay efforts to finalize a rule. The regulator is responsible for reviewing all comments and public feedback and considering those in the revisions to the proposed rule.
“Because of the FTC’s sweeping approach, any final rule is also likely to face legal challenges. However, such delays are far from certain. Therefore, employers should consider certain actions in response to and preparation for the rule’s development,” the firm reported.
Specifically, the FTC says the new proposed rule could increase wages by nearly $300 billion annually and grow career opportunities for about 30 million Americans, according to a news release.
The proposed rule would prohibit employers from:
- Entering into or attempting to enter into a noncompete with a worker;
- Maintaining a noncompete with a worker; or
- Representing to a worker, under certain circumstances, that the worker is subject to a noncompete.
“The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect,” the FTC reports.
It would also preempt state laws with less restrictive noncompete requirements.
The FTC voted 4-0 to extend the comment period by 30 days.
Commissioner Christine S. Wilson issued a concurring statement:
“The [c]ommission received requests to extend the period for public comments on the proposed Non-Compete Clause Rule by 60 days or more. The [c]ommission also received requests that the comment period not be extended,” Wilson said. “Given that the proposed rule is a departure from hundreds of years of precedent and would prohibit conduct that 47 states allow, I would have supported extending the public comment by 60 days. I continue to encourage all interested parties to comment on all issues and alternatives to the proposed rule that are identified in the Notice of Proposed Rulemaking.”
Information on how to submit comments can be found in the FTC’s Federal Register notice.
ACA also recently signed a letter of opposition (PDF) to the Federal Trade Commission’s Notice of Proposed Rulemaking (NPRM) on noncompete clauses sent to Congress this week.
For questions on the proposed rule or to provide input for ACA’s comments, contact ACA’s advocacy team at [email protected].
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