Royal

The FTC Proposes Rule to Ban Noncompete Clauses for all US Workers

January 11, 2023

On January 5th, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that would ban employers from imposing either existing or prospective noncompete clauses on their employees. The proposed rule covers all employees regardless of industry or employer size, with minor exceptions in the sale of a business. The proposal is subject to a 60-day public comment period commencing when the FTC publishes the proposed rule. You can find the text of the proposed rule here.


The FTC’s Proposal

As stated above, the FTC’s proposed rule applies to all employees and to all noncompete clauses or agreements, whether prospective or existing. The rule would require employers to rescind all existing noncompete clauses and inform both former and current workers that their noncompete clauses are no longer in effect. This recission would be required to occur no later than 180 days after the FTC’s final rule is published. The only exception to the ban permits noncompete clauses entered into by a person who is selling a business or disposing of an ownership interest in a business entity in which the individual holds at least a 25% interest.


Although the proposed rule does not put an outright ban on other restrictive covenants, such as non-solicitation or no-hire provisions, it does ban “de facto” noncompete clauses that are “written so broadly that it effectively precludes the worker from working in the same field.” The proposed rule would overrule any state statute, regulation or order that is inconsistent with the rule.


Takeaways

The FTC’s proposal would be a sea change for restrictive covenants in employment. Employers need to be wary of the proposed rule’s ban on “de facto” noncompete clauses, as it is not clear by the FTC’s proposed rule what type of agreements and clauses this could entail. However, there is still time for comment on this rule until 60 days after the FTC’s publication of the proposed rule. Interested parties may file a comment online at https://www.regulations.gov, or on paper by mailing the comment to Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex C), Washington, DC 20580. Given the potential impact of this rule on employers’ existing and prospective restrictive covenants, employers should contact counsel to determine the agreements and clauses that could be at risk.


If your business has any questions on this or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

Massachusetts’ Superior Court Judge Rules Recording in Workplace Admissible

February 19, 2025
The Massachusetts Superior Court found that Massachusetts’ wiretap statue does not bar employers from using allegedly illegally obtained recordings in civil proceedings. In a recent case, an employee claimed she was forced to resign. Plaintiff’s coworker recorded an argument between the Plaintiff and her supervisor without her consent and shared it with supervisors. The employee then sued for discrimination and retaliation, along with two counts for violation of the wiretap statute. Massachusetts is a two-party consent state but, in this case, it was found that the consent of only one party was needed because nothing in the Wiretap Statute bars the use of an allegedly illegally obtained communication in a civil proceeding. The court found that the provisions about the use of illegally obtained communications in evidence are limited to criminal trials. However, depending on the court, results may differ, as this recording was central to proving and/or disproving the Plaintiff’s claim, and as such, the recording was indispensable as a piece of evidence. Issues with unauthorized recordings have been arising all the time in civil proceedings because recording devices are everywhere, whether they be a cell phone, laptop or other recording device. This ruling is good for employers, as if there is an otherwise inadmissible recording that is made that disproves an employee’s claims, it can be admissible as evidence if meets the same scenario above. However, employers must be careful to use these recordings as they may be inadmissible and may not show the same thing that the employer believes in the court’s eyes. This being said, it is prudent to consult an attorney before utilizing a recording for any employment action or in legal action to avoid unwanted consequences. If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

After the DEI Executive Order

February 14, 2025
What Are the Compliance Requirements for Private Employers?
Share by: