FTC Votes to Ban Non-Compete Agreements

The Federal Trade Commission (FTC) issued a new rule on April 23, 2024, banning new non-compete agreements in all employment contexts. This new rule is expected to have significant impacts on employers in a wide swath of industries, including health care. The rule follows a 2021 executive order from the Biden administration encouraging agencies to enact a “whole government” approach to encouraging competition. Specifically, the new rule prohibits employers from entering new non-competes with any employee, including senior executives, or representing to any employee that the employee is subject to a non-compete.

Since the FTC’s authority only extends to for-profit businesses, the rule will not affect employment agreements entered by workers employed by nonprofit organizations. The FTC’s 560-page report repeatedly addresses the expected impact on the health-care industry–perhaps more than any other– and cites to “thousands” of comments from veterinarians, optometrists, physicians, physician assistants, nurse practitioners, and other health-care providers complaining about their non-competes.