Are You Affected by a Non-Compete Agreement?
As an employer, are you using non-compete agreements?
As an employee, are you subject to a non-compete agreement?
If you answered yes to either of these questions, read on…
The Federal Trade Commission (FTC) has effectively banned covenants not to compete (commonly known as non-compete agreements). This ruling prohibits employers from entering into new non-compete agreements with employees. The rationale behind the ruling is that non-compete agreements constitute an unfair method of competition and violate the FTC Act.
Implementation and Legal Challenges
Initially, the rule was set to take effect on September 4, 2024, meaning employers would have been prohibited from creating new non-compete agreements or enforcing existing ones. However, a Texas district court ruled that the FTC lacked the authority to issue a rule banning almost all non-compete agreements. As a result, the case remains pending.
Future Outlook
With Republicans soon to hold a majority on the five-member FTC panel, it is likely that pending appeals will be withdrawn. If this happens, the ban on non-compete agreements may effectively be dead.
However, the situation remains uncertain. If you need assistance with non-compete agreements, please contact Leslie Even for guidance and legal support.
Turke & Steil is available to discuss the final rule and provide guidance on existing non competes or other restrictive covenants.