Five Things You Should Know About The FTC's Ban On Noncompetes

The Federal Trade Commission (FTC) rattled the business world last month when it issued a rule that would nullify most noncompete agreements. Within 24 hours, the FTC was sued by two different parties that argued the agency had exceeded its authority when it issued the rule. In the meantime, employers who use noncompetes are left wondering what to do.

Here are five things employers need to consider as they decide how to proceed in these uncharted waters:

1. Noncompete agreements have not been voided by the rule (yet).

The rule is not effective until September 4, 2024.

2. This rule may never become effective.

A federal court may very well enjoin the rule while litigation is pending. Further, if recent Supreme Court precedent is any indicator, it's possible the high court will ultimately find the rule to be an unconstitutional exercise of power. Everything is in flux until the court battle works itself out.