Proposed FTC Ban on Noncompete Agreements - What Is It and How Could it Affect Yoga Professionals and Yoga Businesses? (United States)
In January, the Federal Trade Commission (FTC) proposed a new rule that would impose a nationwide ban on almost all noncompete agreements between employers and workers in the United States.
Noncompete agreements are legal documents that restrict where, when, and how someone can do business in any given area. They typically are agreements that prevent an employee who leaves a business from working for another company involved in the same activity for a particular amount of time.
Many yoga professionals are asked to sign noncompete agreements, often preventing them from working at another studio or business in the same neighborhood or becoming an entrepreneur and opening a yoga studio altogether. [NPR: Noncompete Agreements Are Everywhere, Even Neighborhood Yoga Studios].
Employers often use noncompete agreements to discourage competition, safeguard proprietary knowledge or intellectual property, protect customer relationships, and protect their investment in specialized training for workers.
In an effort to restrict the use of noncompete clauses that limit worker mobility, on January 5, the FTC proposed a new rule that would impose a nationwide ban on almost all noncompete agreements between employers and workers in the United States citing that “imposing noncompetes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.” With this ban, the FTC estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans who have signed noncompetes. However, employers could experience the downside of proposed rulemaking, such as a reduced incentive to invest in worker training and increased difficulty enforcing confidentiality agreements and customer non-solicits.
Beyond banning traditional noncompete agreements:
(1) the proposed rule would not prohibit non-solicitation agreements that restrict a former employee from actively pursuing their former employer’s clients to follow them to a new place of employment (although state law prohibitions on such agreements, as in California, would still apply)
(2) the proposed rule would also permit noncompete agreements in the narrow circumstances of restrictions on partners or owners of at least 25 percent of a business in connection with the sale of the business
(3) if adopted, employers would be required to rescind all existing noncompete agreements within 180 days and would apply to all “workers” including employees, independent contractors, volunteers, and interns
However, the proposed rule still leaves many questions unanswered and is likely to face legal challenges to the FTC’s authority – it could take months, if not years, for a final rule to be published. In the meantime, both yoga professionals and employers can take a few steps to prepare for any changes ahead.
- Submit comments to the FTC about the proposed rulemaking: The FTC often requests feedback from the public on proposed rulemaking as hearing from the public garners input from diverse points of view and helps the agency shape the final rule. Read the FTC’s fact sheet about the proposed rule and its implications. You can submit your comments at https://www.regulations.gov/document/FTC-2023-0007-0001 . The new deadline to submit a comment is April 19, 2023. [The FTC recently extended the deadline. You can read more here.]
- Share your thoughts with Yoga Alliance: Yoga Alliance always begins by listening to the community to find out how we can best serve yoga professionals and yoga. Share your thoughts about the proposed ban on noncompetes at email@example.com with subject line: Proposed Noncompetes Ban.
- Check applicable state laws: Although noncompete bans are currently active in California, North Dakota, and Oklahoma, (California and North Dakota also prohibit non-solicits of customers and Oklahoma permits only non-solicits of an employee’s established customers), these laws tend to be nuanced state by state. If you have questions about how this proposed rulemaking may affect your business or employment situation, please seek individual advice from a lawyer in your state.
[Yoga Alliance’s Member Assistance Program offers legal services and more to Yoga Alliance teachers, schools, and their households at no additional cost. Learn more.]
- Watch Yoga Alliance’s digital event “How the Federal Trade Commission’s Proposed Ban on Noncompete Agreements May Affect You and Your Yoga Business”: Yoga Alliance hosted a digital event with its legislative and regulatory partners Pillsbury Winthrop Shaw Pittman, LLP to update the yoga community on the proposed rule and the implications for yoga professionals and businesses.
You can learn more about Yoga Alliance’s advocacy efforts and/or information regarding state-specific regulations and legislation impacting yoga professionals and the yoga community at yogaalliance.org/benefits/advocacy.
Your Yoga Alliance membership helps provide an invaluable resource to the yoga community - a dedicated team of advocacy professionals who actively monitors federal and state legislation in the United States that could have an impact on the practice of yoga, the livelihoods of yoga professionals, and the broader yoga community. The team also helps us translate complex regulations into easy-to-understand insights and guidance that we can then share with you. Sign up to receive ongoing U.S. Advocacy Alert emails via your Yoga Alliance member dashboard. Have questions? Email firstname.lastname@example.org
Carr Rizzo, Rebecca, et al. “FTC Releases Notice of Proposed Rulemaking Banning Worker Non-Competes.” Pillsbury Law, Pillsbury Law, 6 Jan. 2023, https://www.pillsburylaw.com/en/news-and-insights/ftc-noncompete-ban.html
Staff, the Premerger Notification Office, and Stephanie T. Nguyen. “FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition.” Federal Trade Commission, Federal Trade Commission, 2 Feb. 2023, https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition.