The Federal Trade Commission (FTC) voted 3-2 on April 30 to ban noncompete contractual agreements for most U.S. workers, including health care workers, setting up likely legal challenges. Set to take effect after 120 days after publication, if not blocked by the courts before then, the majority of commissioners argued that noncompete suppress wages and stifle entrepreneurship, while opponents argued the ruling will undermine competitiveness.  In 2021, President Biden issued an executive order in which he urged the FTC to examine noncompete clauses that unfairly limit workers' mobility. In January 2023, the FTC proposed ending the restrictive covenants, leading to the proposed final rule.

If it goes into effect, the ban will have a significant impact on the health care industry, including physicians in for-profit entities that are not in executive policymaking roles.  It's unclear whether physicians and others who work for nonprofit health care groups or hospitals will be covered.

It is important to note that the noncompete ban has already been challenged in three lawsuits filed in federal court, two in Texas and one in Pennsylvania.  More lawsuits are highly likely, and those potentially affected by the FTC rule should remain in a “wait-and-see” mode as these issues work themselves through the judicial system.