Putting the ban in a nutshell, it would bar employers from imposing noncompete clauses in employment contracts. rule would require the existing clauses to be rescinded within 180 days of the publication of the final rule and that employers provide notice to all currently employed and former employees that the non-compete clause is no longer effective and that they are no longer subject to it. There could be some potential limitations to the proposed ban, however. In the proposed rule itself, it suggests alternatives to the proposed rule for which the FTC seeks public comment on. For example, the proposed rule would not cover non-compete between franchisors and franchisees. The FTC seeks comment on whether such clauses should be covered between franchisors and franchisees and, if covered, whether there should be a categorical ban on such clauses or a rebuttable presumption of unlawfulness, or whether different types of clauses should be subject to different standards or exemptions. The FTC seeks similar comments on similar considerations regarding senior executives and treating low/high-wage workers differently. Although the proposed rule has no immediate effect, employers may consider taking proactive measures to demonstrate good faith compliance should the rule go into effect or lean towards the attitudes/ trends of the FTC and other agencies regarding these clauses, even if the rule doesn’t go into effect. These proactive measures may include prohibiting the use of non-compete clauses in contracts, using non-compete clauses in the meantime but making sure they are specific in scope and not overburdensome, and auditing current contracts. If the bank chooses to audit current contracts, it should be doing a careful review looking for non-compete clauses and de facto non-compete clauses as described previously and getting a head start on determining what action to take with the identified clauses should the rule go into effect. n Prince Girn serves C/A as an Associate General Counsel. Prince’s focus is as a member of the expert Hotline team at Compliance Alliance, where his knowledge in areas of lending, real estate, and credit procedures makes him an asset for our member banks. He is also a writer for the Bankers Alliance monthly magazine and other state banker publications. MEET YOUR UTAH RELATIONSHIP MANAGERS Bankers’ Bank of the West bBWEST.COM 800-873-4722 WHERE COMMUNITY BANKS BANK Member FDIC Scan to call now As a bankers’ bank we strive to help with every level of service and expertise, covering anything from loan participations, merchant services, ATM/Debit and much more, because we aim to answer your questions with, “…yes, we can do that too!” Lance Niles, lniles@bbwest.com David Philippi, dphilippi@bbwest.com Issue 1. 2023 7
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