From Premier Member, Jackson Walker following the FTC Rule Banning Most Non-Competes

On April 23, 2024, in a 3 to 2 vote, the Federal Trade Commission (FTC) voted to implement its final rule prohibiting non-compete agreements in the workplace. Scheduled to take effect 120 days after its publication in the Federal Register, the final rule will supersede any and all conflicting state laws.

Next Steps

Employers seeking safe harbor in the senior executive exception should begin taking steps toward drafting and executing enforceable non-compete agreements before the effective date of the rule. Such steps may include ensuring the senior executive’s salary and job duties meet the requirements of the rule.

Employers should also begin the process of identifying workers subject to non-compete agreements, keeping in mind the broad definition of “worker” provided by the final rule. However, before sending out notice, employers should wait and see if, before the effective date, a court enjoins enforcement of the rule. Otherwise, an employer may waive enforcement of a non-compete clause based on an FTC rule that is ultimately found unconstitutional.

Read more and find out what exceptions are available.

Contact Scott Fiddler if you have questions.