FTC Issues Final Rule Prohibiting Most Post-Employment Non-Compete Agreements

On April 23, 2024, the United States Federal Trade Commission ("FTC") issued a Final Rule (the "Final Rule") that would prohibit the use of non-compete clauses with most American workers. The Final Rule is scheduled to go into effect 120 days following its publication in the Federal Register (the "Effective Date"), which is expected soon; however, substantial legal challenges may result in delay or invalidation of the Final Rule before the Effective Date.

The Final Rule prohibits any business from entering into or attempting to enter into any post-employment non-compete clause with its workers, regardless of the worker's title, authority, or salary, except for certain agreements in connection with sales of businesses. It also prohibits businesses from enforcing (or attempting to enforce) any non-compete clauses or representing that any worker is bound by a non-compete clause, other than agreements with senior executives in effect as of the Effective Date