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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to rescind all existing noncompete clauses and inform both former and current workers that their noncompete clauses are no longer in effect.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.

Medical Marijuana Use Protected from Adverse Action

April 2, 2025
A recent court decision in Pennsylvania offers clarification that employers cannot take adverse action for marijuana use against individuals who possess medical marijuana cards, at least under Pennsylvania’s Medical Marijuana Act. In this decision, an individual received a conditional job offer for a non-safety sensitive position, contingent on a drug test. The individual disclosed his state-certified use of medical marijuana to treat anxiety, depression and ADHD, assuring the employer that it wouldn’t affect job performance or safety. After a positive test for marijuana, the employer rescinded the offer, citing safety concerns. The individual sued the employer under the Pennsylvania Medical Marijuana Act (“MMA”) and disability discrimination under the Pennsylvania Human Relations Act (“PHRA”). The Court allowed the individual’s claim under the MMA to proceed, potentially creating substantial precedent for tolerance of individual medical marijuana use in non-safety sensitive positions. The Court specifically noted that MMA protects individuals not just from discrimination based on card holder status, but also for adverse actions based solely on lawful medical marijuana use. The Court otherwise dismissed the individual’s claims under the PHRA because the PHRA does not require employers to accommodate medical marijuana use, even if it is prescribed for a legitimate medical condition. While a Pennsylvania decision, this decision potentially has rippling implications that will affect Massachusetts employers and employers in states where medical marijuana use is allowed under state law, which is allowed in some manner in 44 states. Employer Takeaways 1. Understand State-Specific Protections : Laws regarding medical marijuana use differ widely across states. In some areas, cardholder status is protected, while in others, it is not. Employers operating in multiple states must ensure their hiring and accommodation practices comply with the relevant laws in each state. 2. Base Safety Concerns on Job-Specific Evidence : General or speculative safety concerns are insufficient, particularly in states with strict employee protections. Safety risks cited should be specific, evidence-based, and directly related to the essential functions of the job. 3. Review Drug Testing and Accommodation Policies: Update your policies to reflect current state laws and clarify how your organization manages disclosures of medical marijuana use, especially during the hiring process . If you have any queries regarding drug testing or other workplace accommodations following this ruling, it is prudent to contact legal counsel. 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.

The Royal Law Firm Awarded Finalist of 2025 Best of The Valley Readers’ Poll

March 28, 2025
The Royal Law Firm was a Finalist for Best Law Firm in The Best of The Valley Readers' Poll for 2025, as published by the Valley Advocate! Thank you to everyone who voted for us, and to those of you who trust us to help you in times of need. Click here to check out all of the category winners and finalists.
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