{"id":2125,"date":"2023-01-13T14:27:31","date_gmt":"2023-01-13T19:27:31","guid":{"rendered":"https:\/\/www.bowditch.com\/campuscounselnewengland\/2023\/01\/13\/bob-young-quoted-in-massachusetts-lawyers-weeklys-business-bar-questions-ftcs-proposed-ban-on-noncompetes\/"},"modified":"2023-01-13T17:51:22","modified_gmt":"2023-01-13T22:51:22","slug":"bob-young-quoted-in-massachusetts-lawyers-weeklys-business-bar-questions-ftcs-proposed-ban-on-noncompetes","status":"publish","type":"post","link":"https:\/\/www.bowditch.com\/campuscounselnewengland\/2023\/01\/13\/bob-young-quoted-in-massachusetts-lawyers-weeklys-business-bar-questions-ftcs-proposed-ban-on-noncompetes\/","title":{"rendered":"Bob Young Quoted in Massachusetts Lawyers Weekly\u2019s \u201cBusiness bar questions FTC\u2019s proposed ban on noncompetes\u201d"},"content":{"rendered":"

Earlier this month, the Federal Trade Commission (FTC) unveiled a rule to ban noncompete agreements. The rule would make it illegal for an employer to enter into or attempt to enter into a noncompete with a worker, maintain a noncompete with a worker, or represent to a worker that the worker is subject to a noncompete agreement.<\/p>\n

The proposed rule provides a key exception to the ban for a noncompete clause that is entered into by a person who is selling a business \u201cor otherwise disposing of all of the person\u2019s ownership interest in the business entity, or by a person who is selling all or substantially all of a business entity\u2019s operating assets, when the person restricted by the non-compete clause is a substantial owner of, or substantial member or substantial partner in, the business entity at the time the person enters into the non-compete clause.\u201d For purposes of the rule, \u201csubstantial owner,\u201d \u201csubstantial member,\u201d and \u201csubstantial partner\u201d mean someone holding at least a 25 percent ownership interest in a business entity in question.<\/p>\n

Bob Young spoke with Massachusetts Lawyers Weekly <\/em>about the FTC\u2019s proposed rule and the sale-of-business exception:<\/p>\n

\u201cYou could have someone who is a 24 percent owner and has been CEO of the company for 10 years,\u201d Bob said. \u201cThe company gets sold and that person can go across the street the next day and open a competing business. That would be a massive change.\u201d<\/p><\/blockquote>\n

Another issue with the proposed rule is that the definitions include a \u201cfunctional test\u201d for whether a contractual term is a noncompete clause.<\/p>\n

Bob noted the functional test poses the risk of overturning nonsolicit agreements and nondisclosure agreements. He stated: \u201cIt\u2019s enough of a sea change to have noncompetes thrown out nationwide. But to have to run the risk of having something like a nondisclosure or nonsolicit being unenforceable, that would just amplify the sea change.\u201d<\/p><\/blockquote>\n

Continue reading \u201cBusiness bar questions FTC\u2019s proposed ban on noncompetes<\/a>\u201d on the Massachusetts Lawyers Weekly<\/em> website (subscription required).<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Earlier this month, the Federal Trade Commission (FTC) unveiled a rule to ban noncompete agreements. 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