April 23, 2024

FTC Effectively Bans Existing and New Non-Compete Agreements

You may remember reading about this when the proposed rule was published more than 15 months ago.

On April 23rd, the FTC published its final rule that effectively holds that, “it is an unfair method of competition—and therefore a violation of Section 5 [of the Federal Trade Commission Act]—for employers to enter into noncompetes with workers.”

Under the final rule existing agreements will be void and non-enforceable except as applied to “senior executives.” Moving forward, non-competes will not be enforceable as applied to any worker, including senior executives.

When the rule takes effect, employers will be required to provide clear and conspicuous notice to the worker by the effective date that the worker’s non-compete clause will not be, and cannot legally be, enforced against the worker. The rule requires a specific form and format for this notice.

The rule is scheduled to take effect 120 days from the date the rule is published in the Federal Register. As of this writing (April 29, 2024) that has not yet happened.

At least two lawsuits have been filed challenging the rule. So, what now? Join this FREE webcast for more information.