In 2024, employers rushed to track the twists and turns of the Federal Trade Commission’s (FTC) noncompete ban, which attempted to limit the enforceability of agreements that restrict employees from working for a competitor following employment. Though the FTC’s ban has since fizzled out, the commotion around noncompetes also led to conversations about “forfeiture-for-competition” clauses — a similar, but distinct type of agreement.
On May 6, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and Federal Housing Finance Agency (FHFA) issued a notice of proposed rulemaking and request for public comment to implement Section 956 of the Dodd-Frank and Wall Street Reform and Consumer Protection Act (Dodd-Frank). Under Section 956, the FDIC, OCC, FHFA, National Credit Union Association (NCUA), Securities and Exchange Commission (SEC), and Board of Governors of the Federal Reserve System (the Fed) are tasked with jointly prescribing regulations that (1) prohibit incentive-based compensation at covered financial institutions that encourages inappropriate risk-taking because it is excessive or could lead to material financial loss, and (2) require the disclosure of information concerning these compensation arrangements to the appropriate federal regulator.