Federal Trade Commission (FTC) announces nationwide ban of non-compete agreements. 

What do I do now?

On Wednesday, April 24, a significant change rocked the employment landscape as the Federal Trade Commission (FTC) announced the nationwide ban of non-compete agreements. This move grants employees the freedom to pursue new opportunities without the constraints of these non-compete restrictions.

Under the new ruling, the vast majority of existing noncompete agreements will become unenforceable. Employers are also prohibited from creating or enforcing any new noncompete agreements, except for a specific group of employees. The only two exceptions to the non-compete are senior executives in policy-making roles who earn more than $151,164 annually and non-competes in connection with a business sale.

All current state laws limiting non-competes would be preempted unless they provide greater worker protection than the FTC rule.

As part of this ban, employers will be required to notify both current and former employees that their non-compete agreements are no longer valid.

As part of this ban, employers will be required to notify both current and former employees that their non-compete agreements are no longer valid.

Despite the impending shift, industry groups, including the U.S. Chamber of Commerce, have already or are gearing up to challenge the ban.

Keep in mind, this groundbreaking change won’t take effect for at least 120 days after publication in the Federal Register, (August 22, 2024) giving employers time to prepare. Employers are required to provide “clear and conspicuous” notice to the worker and the notice must be provided digitally or in writing – oral notice won’t suffice.  

In light of the final rule, employers will need to explore alternative means to safeguard their trade secrets and investments, such as non-disclosure, non-solicitation, and confidentiality agreements. Take the time now to develop a strategy and put trade secret protections in place if you do not already have them. 

If you have any questions or concerns about how this new rule may impact you or your business, please contact us at Loutel. We are here to help you.