FTC Votes On Final Rule To Ban Non-Compete Agreements

Following an extended public comment period that began in January of 2023, the Federal Trade Commission (FTC) voted Tuesday, April 23 to implement a new rule that would effectively ban non-compete agreements nationwide, except in limited circumstances.

The Final Rule defines non-compete agreements as an "unfair method of competition" that violates the FTC Act. It prohibits employers from entering into new non-compete agreements with workers beginning on the effective date. The Rule uses a two-pronged approach for existing non-competes. For "senior executives," defined as those earning more than $151,164 annually in a "policy-making position," existing non-competes can remain in force indefinitely. The FTC estimates that fewer than 1% of workers fall into this classification. The Final Rule prohibits businesses from entering into or enforcing new non-competes upon the effective date of the Act, including senior executives in policy-making positions. Except for