FTC Approves Final Rule Banning Non-Compete Agreements

In today’s meeting of the U.S. Federal Trade Commission (FTC), the FTC voted 3-2 to approve a final rule that bans new non-compete agreements with all employees.  Additionally, the final rule requires employers to send notices to all current and former employees who are subject to a non-compete provision informing them that these provisions will not be enforced.  The only exception to the final rule is that an existing non-compete can remain in force if the employee is a “senior executive” who earns more than $151,164 annually and holds a “policy-making position.”

Non-compete clauses tied to the sale of a business are not prohibited by the final rule.

The two Commissioners who voted against the final rule both expressed doubts about whether the FTC has Congressional authority to make such a rule.  It is highly anticipated that the final rule will face legal challenges in federal court, potentially leading to an injunction against the FTC’s enforcement of the final rule.

Sprouse Shrader Smith will continue to monitor this issue and provide updates.  For questions or concerns about the issue, please contact either the author of this article or your attorney at the firm.

Article by Iwana Rademaekers
Sprouse Shrader Smith PLLC
Posted April 23, 2024