INSIDE COMPLIANCE

In April of 2024, The Federal Trade Commission (FTC) issued their final rule banning non-competes across the nation in an effort to promote competition. A non-compete contract is an agreement between an employee and an employer where the employee agrees not to work for competitors or start a competing business for a certain period after leaving the company. Non-competes are meant to protect the employer’s business secrets, customers, or sensitive information from being used by rivals. The FTC’s proposed rule aimed to eliminate nearly all non-compete clauses and declare them an “unfair method of competition” under the rule. The rule would affect existing agreements, except for certain senior executives, and require employers to notify affected workers of its enforcement. It also sought to prohibit employers from entering into nearly all new non-compete agreements after the effective date of September 4th. Since the original publishing of the rule and leadup to the effective date, there have been many new developments in reaction to the final rule. This included some precedent-setting legal decisions as well as actions taken by various state governments. With these developments, the current status has been altered, which could lead to a number of possible short-term outcomes.