FTC Extends Comment Period on Proposed Noncompete Rule

Allen Smith, J.D. By Allen Smith, J.D. March 8, 2023

​The Federal Trade Commission (FTC) has extended its public comment period until April 19 on its proposed rule to ban noncompete clauses. We've gathered articles on the news from SHRM Online and other outlets.

Original Comment Deadline Was in March

Prior to its extension, the comment deadline on the proposed rule had been March 20. FTC Commissioner Christine Wilson said she would have supported extending the public comment period by 60 days rather than 30 "given that the proposed rule is a departure from hundreds of years of precedent and would prohibit conduct that 47 states allow."


SHRM Has Raised Concerns About Proposed Rule

Following the issuance of the proposed rule, Emily M. Dickens, chief of staff and head of public affairs for the Society for Human Resource Management (SHRM), said the proposal was overly broad and could potentially harm businesses that depend on noncompetes to thrive. She cited companies that operate in very small, emerging industries where crucial know-how cannot be safeguarded through nondisclosure agreements alone. Although "there are jobs where it makes no sense to have noncompetes," Dickens said, "this kind of blanket ban is going to stifle innovation."

(SHRM Online)

Health Care Opposition

The American Hospital Association has come out against the FTC's proposed noncompete rule. "Congress has not granted the FTC the authority to act in such a sweeping manner," the association's general counsel and secretary, Melinda Reid Hatton, wrote to FTC Chair Lina Khan. "Even if the FTC had the legal authority to issue this proposed rule, now is not the time to upend the health care labor markets with a rule like this."

(Fierce Healthcare) and (American Hospital Association)

Reason for and Impact of Proposed Rule

When the proposed rule was released, Khan said noncompete clauses "block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand."

In a press release, the agency further stated that it believes noncompete clauses negatively affect competition in labor markets by suppressing wages and labor mobility. According to the agency, these clauses also prevent new businesses from forming, stifling entrepreneurship and hampering innovation.

(Fisher Phillips) and (FTC)

Thousands of Comments Received

The comment period provides an opportunity for stakeholders to voice concerns about the FTC's proposed rule. More than 16,000 comments have been received to date, and nearly 9,000 have been posted.

(JD Supra) and (Regulations.gov)



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