FTC Issues Final Rule Purporting To Ban Most Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission ("FTC") voted 3-2 to issue a new rule that will dramatically impact employers that use noncompete agreements to protect their business interests. In January 2023, the FTC issued a proposed rule and invited public comments. Now, 14 months and more than 26,000 comments later, the FTC has issued a final rule very similar to the proposed rule. The FTC has determined that the vast majority of noncompete agreements are an unfair method of competition, and therefore, a violation of Section 5 of the FTC's governing Act. The only exceptions are noncompete restrictions that are entered into in connection with a sale of a business (or asset purchase) and those entered into with certain senior executives.¹ Answers to some key questions are set forth below: