As the FTC continues to consider the huge volume of comments received on its proposal at the beginning of this year to adopt a rule that bans non-compete restrictive covenants nationwide, some healthcare organizations are reconsidering the value of such restrictions. As reported in Modern Healthcare (July, 2023), the value of a restrictive covenant that may not be enforceable is questionable in light of the potentially negative effect of a proposed covenant on recruiting efforts.
State-level bans on non-compete agreements in a few states also create dilemmas for multi-state employers.
The uncertainty created by the FTC's delay in reaching a decision on its proposed ban may create issues for other employers as well. Restrictive covenants prevent loss of highly valuable personnel and protect the organization's investment in recruiting, compensating and training top-level employees. Does the FTC's delay cast a shadow on this tool and thereby create a dilemma for employers who would otherwise be well-advised to use non-compete agreements?
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