As an update to our previous blog post on non-compete laws (found here), the Federal Trade Commission (FTC) proposed a rule yesterday that would ban non-competes in employment contracts.

An independent contractor is a worker who contracts with individuals or entities to provide services and is distinct from an employee. When workers are classified as independent contractors, they are not entitled to the benefits and protections afforded to employees. If an employer misclassifies workers as independent contractors rather than employees, even if by accident, there can be severe penalties.

A non-competition agreement (or "non-compete") is a legal contract designed to prevent an employee from competing with their employer. Generally, non-compete agreements must be no broader than necessary to protect the employer's legitimate business interests. Restrictions included in such agreements must also be narrowly drawn with respect to duration, geography, and the type of competitive activities prohibited.