The FTC’s new proposal
The Federal Trade Commission (FTC) recently proposed a rule that could profoundly alter the landscape of noncompete agreements in the United States-and the way that dental practice owners employ clinicians-should it successfully pass. This new rule aims to ban noncompete clauses for all “workers” with few exceptions, which can include employees, independent contractors and owners. For dental practice owners, this sweeping change could significantly impact how they manage their practices, retain talent and protect their business interests.
Traditionally, noncompete agreements have been governed by state laws, resulting in a diverse legal landscape across the country. Some states, like California, already ban noncompete agreements (with limited exceptions for the sale of a business), while others generally permit them under specific conditions, such as reasonable geographic and time constraints. This patchwork approach requires businesses to tailor their noncompete strategies according to local laws and business needs.
The FTC’s proposed rule, released on April 23, 2023, seeks to create a uniform standard by banning noncompete clauses nationwide. The rule defines “workers” broadly to include employees, independent contractors, and business owners. The primary exceptions to this blanket ban are noncompete agreements tied to the sale of a business as well as existing (not new) covenants for certain high-level executives who make policy decisions for the business and earn at least $151,000 annually.
Source: The FTC’s new noncompete rule: Implications for dental practice owners / Dentistry IQ