Breaking News: FTC Finalizes Nationwide Noncompete Ban

April 23, 2024

Today the Federal Trade Commission (FTC) voted to finalize a new rule to prohibit employers from enforcing noncompetes against employees. Highlights of the new rule include:

  • Employers are prevented from entering into new noncompetes with workers on or after the rule’s effective date, which will be 120 days after the rule is published (which will likely be later this week).
  • Employers may enforce existing noncompetes with “senior executives” who are defined as earning more than $151,164 and who are in a “policy-making position.”
  • The rule requires employers to notify workers that their noncompetes are no longer in effect and will not be enforced and provides model language that employers can use to notify employees.
  • The rule includes an exception that allows noncompetes between the seller and buyer of a business.
  • The comments of the rule specifically refer to the fact that customer non-solicitation agreements could fall within the definition of a noncompete noting “[w]hether a non-solicitation agreement meets this threshold is a fact-specific inquiry.”

For a link to the FTC website with more information, click here. For more information and guidance on how this breaking news affects your business, contact our Employment & Benefits Team.

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