FTC Signals Its Intent To Pursue Nonprofit Health Care Entities With Its Non-compete Ban Whenever Possible

Summary of article from Seyfarth Shaw LLP, by Jesse Coleman, Yumna Khan:

The Federal Trade Commission’s (FTC) Final Rule banning non-competes in worker agreements may not exempt nonprofit health care entities, including most hospital systems in the US. The FTC asserts that merely claiming tax-exempt status is not enough to be beyond its jurisdiction; it will also examine whether the corporation is organized for charitable purposes and whether either the corporation or its members derive a profit. The FTC has previously exercised jurisdiction over nonprofit entities engaged in business on behalf of for-profit members. The Final Rule, set to take effect on September 4, 2024, is currently facing legal challenges questioning its constitutionality. In the interim, nonprofit health care entities should consult with legal counsel to determine potential impact from the FTC’s non-compete ban.