FTC's Final Rule Prohibits Non-Competes With Employees

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On April 23, 2024, the FTC voted to adopt a rule prohibiting employers from entering into non-competes with workers employed by companies over which the FTC has jurisdiction. In accordance with the commentary issued in connection with its proposed rule, issued on January 4, 2023, and as discussed in a prior Client Alert, which addressed the rule as initially proposed, the FTC has held that non-competes with employees are an unfair method of competition, and therefore a violation of Section 5 of the Federal Trade Commission Act.

The final rule provides that existing non-competes with workers will be unenforceable after the effective date of the final rule, which will take effect 120 days from the date the rule is published in the Federal Register. This date is expected to occur on or about August 21, 2024. By the rule's effective date, employers are required to notify workers who previously entered into