FTC noncompete ban: Where the proposal stands 1 year later

In January 2023, the Federal Trade Commission proposed a rule that would ban noncompete contracts for full-time employees and independent contractors. 

FTC still has not issued a final rule or signaled when it will, but the agency will vote on its final rule in April, according to a Bloomberg Law report. The agency received around 27,000 comments on its draft rule. 

Additionally, once the FTC issues the final rule, private parties, including the U.S. Chamber of Commerce, have signaled they will challenge it in court, according to a blog post by Employment Law World. 

The Supreme Court could also be an obstacle. According to the blog post, the current Supreme Court has "been particularly averse to upholding federal agency rules" and would likely scrutinize the rule. 

"Everybody is eagerly awaiting some resolution on the issue of noncompetes," Manoj Mehta, MD, medical director at Endoscopy Center of the North Shore in Wilmette, Ill., told Becker's. "While this might take much longer than the FTC has projected, it will fundamentally change the landscape of how medicine operates."

About 87% of physicians support the FTC's noncompete ban, according to a March poll conducted by Doximity. Additionally, 60 percent of employed physicians were required to sign a noncompete when starting their jobs, according to a survey from NORC at the University of Chicago. 

At least seven states made an effort to restrict or ban noncompetes in 2023. Indiana restricted physician noncompetes in July, nullifying noncompetes for primary care physicians.

In the last 10 years, physicians have flocked to hospital employment because joining an independent practice can be financially challenging, but noncompete clauses make it difficult to exit contracts. 

"Noncompetes were more important when physician private practices were the norm," Marsha Haley, MD, clinical assistant professor of radiation oncology at the University of Pittsburgh, told Becker's. "Now that most physicians are employed by large health systems, we need to rethink the concept of noncompetes. Many large health systems have a footprint that expands several states. If a physician is let go or leaves the practice, this requires the physician to move a long distance to meet the noncompete clause."

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