FTC Bans Employee Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (FTC) announced a new rule that "[i]t is an unfair method of competition—and therefore a violation of Section 5 of the FTC Act—for employers to enter into non-compete clauses with workers." As a result, the final rule generally bars most non-compete agreements. This means most existing non-compete agreements will be unenforceable, and employers will be prohibited from creating new agreements once the rule becomes effective. There are some narrow exceptions, which are discussed below. The rule also requires employers to provide notice to workers impacted by the rule. Importantly, however, the final rule is already being challenged in court, which may delay, and could potentially invalidate the rule entirely.