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Federal Trade Commission Announces Rule Banning Non Competes Nationwide With a Few Exceptions

On Tuesday April 23, 2024 the Federal Trade Commission (FTC) issued a final rule banning most non competes nationwide. At Trembly Law, we are actively monitoring the situation and are ready to assist you in navigating these changes effectively. Our goal is to ensure that your business remains compliant, while also safeguarding your interests in this rapidly evolving legal environment. Here are the updates:

Under the new rule, existing non-competes for the vast majority of all workers will no longer be enforceable.  One of the very few exceptions is existing non-competes with Senior Executives that earn more than $151,164 annually and who are in policy-making positions. This limited exception, however, only applies to non competes that are in effect prior to the new rule.  Employers will not be allowed to enter into new non-competes with Senior Executives after the new rule is effective.

Are there alternatives to Non-Competes?

The FTC stated that trade secret laws and non-disclosure agreements (NDA’s) will not be banned under the new rule.  There are other options that should be discussed and implemented in your employment documents.

Are there exceptions to this ban?

The final rule does not apply to non-competes entered into by a person pursuant to a bona fide sale of a business entity. Also, it does not apply where a cause of action related to a non-compete accrued prior to the effective date.

Do I have to notify my employees of this ban?

Under the new rule, employers will be required to provide notice to workers bound to an existing noncompete that the noncompete agreement will not be enforced against them in the future.

When will the new rule become effective?

The final rule becomes effective 120 days after publication in the Federal Register.

What Does This Mean for You?

The future of non-compete clauses remains somewhat uncertain. Here’s what you can do. Companies should review their employment contracts and explore alternative ways to protect confidential information, such as trade secret protections.  Companies should also explore if any other restrictive covenant, such as non-solicitation agreements are affected by these changes.

Stay updated and compliant with the latest changes in non-compete agreements by consulting the attorneys at Trembly Law Firm. As the new non-compete law reshapes business and employment landscapes, it’s crucial to have professional guidance to navigate these changes successfully. Contact us today for top-tier legal advice that ensures you’re adhering to the latest regulations.

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