On April 23, 2024, the U.S. Federal Trade Commission approved a proposed final rule to ban non-competition agreements for most employees in the United States.
The rule defines a prohibited noncompete clause as any “term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from: (i) Seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment,” or (ii) “Operating a business in the United States after the conclusion of the employment.”
The rule was premised on the FTC’s view that non-competition clauses suppress wages and unfairly limit competition in violation of the Federal Trade Commission Act.
The FTC’s rule would preempt any conflicting state laws. Existing noncompete agreements would become unenforceable, and employers would be required to provide notice to both current and former workers that their noncompete clauses are no longer valid.
LINKS
Read “Has the Federal Government Abandoned Regulation of Noncompete Agreements?,” authored by Terence P. McCourt, published by Massachusetts Lawyers Weekly. (subscription)