FTC Publishes Final Rule Effectively Banning Most Employee Non-Compete Clauses

On April 23, 2024, the Federal Trade Commission (FTC) issued a final rule that will effectively prohibit most non-competition clauses and will rescind most existing non-competition clauses. Most paid and unpaid workers, independent contractors, interns and volunteers are covered. The rule may take effect in late August 2024, 120 days after its eventual publication in the Federal Register. However, it has already been challenged in court which may delay or prevent the rule from taking effect. Although no immediate action is necessary, employers should make sure they understand how the rule would affect them and continue to monitor the developments.

The Rule

The rule broadly defines a non-compete clause as: "a term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from: (i) seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the