FTC Finalizes Rule Against Employee Noncompetes

On April 23, 2024, the Federal Trade Commission ("FTC" or the "Commission") voted to finalize a rule abolishing the vast majority of employee noncompetes across the United States (the "Noncompete Rule" or "Rule"). The FTC first announced its proposal to ban noncompetes in 2023, prompting over 26,000 public comments in response. The FTC has been reviewing these comments ever since, culminating in this week's vote during an open meeting of the five-member Commission. The vote to adopt the rule was 3-2, with the Commission's three Democratic members voting in favor of the rule and its two Republican members dissenting.

The Noncompete Rule bans noncompete agreements with employees of all ranks and seniorities in virtually all industries across the United States. The core of the rule is the FTC's finding that noncompetes are an "unfair method of competition" under Section 5 of the FTC Act, both to the extent that noncompetes can be exploitative and insofar as they