On April 23, 2024, the Federal Trade Commission (FTC) voted to issue a final rule that would prohibit employers from entering into or enforcing noncompete clauses with most employees. The final rule was published in the Federal Register on May 7, 2024, and is scheduled to take effect 120 days after such date on Sept. 4, 2024.
Subject to very limited exceptions, the final rule provides that:
· The use of noncompete clauses will be banned as of the effective date
· Any existing noncompete clauses (other than those entered into with senior executives) will be invalidated
· Employers must notify all employees (other than senior executives whose existing noncompete agreements will remain enforceable) that their existing noncompete agreements will not be enforced.
The FTC stated that it aims to promote competition by protecting the freedom of workers to change jobs, increasing innovation and fostering new business information.
Click here for a detailed compliance bulletin regarding the ruling, exceptions, and how to prepare.
