FTC Final Rule Banning Noncompete Clauses (on or about 8/22/24)

The U.S. Federal Trade Commission (FTC) approved a proposed final rule banning most new noncompete clauses in employment contracts—a sweeping rule affecting millions of workers.

The rule also makes all existing noncompete agreements except for those covering senior executives unenforceable and requires employers provide notice to current and former workers that their noncompete clauses are no longer in effect. The FTC defines the term “senior executive” to refer to workers earning more than $151,164 annually who are in a “policy-making position.”

The rule goes into effect 120 days following its publication in the Federal Register. Enforcement could be further delayed by likely legal challenges.
FTC Bans Most New Noncompete Agreements Nationwide
SHRM | Apr 2024

While the U.S. Federal Trade Commission’s (FTC’s) new rule banning noncompete agreements faces legal challenges, workplace experts say employers should prepare for the rule by reviewing existing agreements, exploring alternatives and focusing on retention efforts, which have taken on added importance.
FTC Noncompete Ban: Employers’ Next Steps
SHRM | Apr 2024

Effective date:  On or about 8/22/24- The new rule will become effective 120 days after the FTC publishes it in the Federal Register.
Final Rule
Press Release
Resources and Model Notices (about halfway down the page)
FTC | Apr 2024

Law Firm Articles

The federal government took an unprecedented step yesterday by finalizing a rule that seeks to ban non-competition agreements between nearly all employers and all workers. If the rule survives legal challenges, you will not only be prohibited from entering into most new non-competes, you’ll also be prevented from enforcing existing non-competes in all but a few circumstances, such as against a limited class of senior executives.
Feds Ban Non-Compete Agreements: A 5-Step Plan for Employers
Fisher Phillips | Apr 2024

Existing non-compete agreements with senior executives remain enforceable. Employers must notify all other workers that existing non-competes are unenforceable by the effective date.
New FTC Rule Bans Non-Compete Agreements in All Employment Contracts
Holland & Knight | Apr 2024

“Non-compete” redefined. The FTC notes that this definition of “non-compete” applies not only to non-competes, but terms that function as non-competes—meaning any contractual provision that “has the effect of prohibiting the worker from seeking or accepting employment.” As examples of agreements/terms that may function as non-competes, the FTC identifies: (1) a nondisclosure provision that is “written so broadly that it effectively precludes the worker” from working in the same position for a new employer and (2) a provision that requires a worker to repay training costs where the repayment is not “reasonably related to the costs” of the training.
FTC Adopts Final Rule Banning Employers From Entering Non-Competes
Ogletree | Apr 2024