On January 5, 2023, the Federal Trade Commission issued a notice of proposed rulemaking to prohibit noncompete agreements nationwide. Warner Norcross + Judd LLP summarized the proposed rule here.
On April 19, 2023, Michigan Attorney General Dana Nessel joined attorney generals from sixteen other states and the District of Columbia in a letter supporting the FTC’s proposed rule. In that letter, the State AGs, as they refer to themselves, argued that the proposed rule will benefit workers and support fair competition among businesses. They also argued that it would clarify issues of law by (a) yielding predictable results in states without noncompete statutes and (b) by resolving issues and conflicts surrounding how different states treat noncompete agreements.
The State AGs also offered multiple recommendations to the FTC including that the definition of “worker” under the rule be broad enough to encompass employees who are allegedly misclassified as “franchisees” and that the rule be written in such a manner so as not to preempt state laws that provide workers similar or broader protections.
This letter comes in the wake of a countrywide push to narrow or even ban noncompete agreements. Even without a decision from the FTC, Michigan’s legislature is looking at this possibility under 2023 House Bill No. 4399 and 2023 Senate Bill No. 143, though these bills are only in the preliminary stages of consideration.
If you have questions about the FTC’s proposed rule, the proposed bills in front of Michigan’s legislature or how these may affect your existing employment and noncompete agreements, please reach out to Andrea Bernard, Scott Carvo, Dean Pacific, Jon Kok or Jarrod Trombley.
