FTC Non-Compete Ban Resources

At McLane Middleton, we have put a team and resources together to help you navigate the new Federal Trade Commission (FTC) rule that would ban and render unenforceable most non-compete clauses in employment contracts.

Specifically, on April 23, 2024, the FTC issued a final rule as part of a purported effort to promote competition, protect the freedom of workers to change jobs, and increase innovation. The FTC’s new rule would prohibit employers from entering into any new non-compete agreements as of the effective date, although there are certain notable exceptions (e.g., non-competes in connection with the bona fide sale of a business). The rule would also invalidate existing non-competes with workers—with an exception for senior executives—and require employers to provide written notice to any current or former worker subject to a non-compete informing them that the employer will not enforce that provision after the effective date. While the rule’s effective date was scheduled for September 4, 2024, the rule has been subject to numerous legal challenges. On August 20, 2024, a Texas federal court issued an order holding the rule unlawful and setting it aside, such that the rule cannot take effect nationwide at this point. We will continue to monitor the status of any appeal and other litigation surrounding the rule, and will provide updates accordingly. In the meantime, employers are nonetheless encouraged (1) to review all employment-related documents for the existence of non-compete clauses, in case the rule will become effective at some point in the future, and (2) consider the necessity and scope of any new non-compete clauses that they may include in employment contracts going forward.

To assist you, we will be periodically updating this site with resources for employers to understand the new rule and how your business can comply, if it will become effective at some point. If you have a question or would like the firm to assist you in this area, please contact your individual attorney. In addition, you can contact attorneys Margaret (Peg) O’Brien at (603) 628-1490, who heads the McLane Middleton Employment Law Group, Jennifer Parent at (603) 628-1360, who is a member of the firm’s Litigation Department and Chair of the Business Litigation Practice Group, or Christopher Walsh at (603) 628-1140, who is a member of the firm’s Litigation Department and Business Litigation Practice Group.

Client Alert:

Texas Federal Court Sets Aside the FTC’s Rule Banning Non-Competes, With the Court’s Order Having Nationwide Effect (Christopher Walsh, August 23, 2024)

News Articles:

Federal Trade Commission’s Non-Compete Ban: A Battle of the Courts (Vineesha Sow, Employment Law Business Guide – July 26, 2024)

FTC Bans Non-Competes (Sean LaPorta, Employment Law Business Guide – April 25, 2024)

Evolving Landscape of Employee Restrictive Covenants (Published Seacoast Online – December 7, 2023)

FTC Announcements:

FTC final rule issued on April 23, 2024

FTC press release from April 23, 2024

CONTACT:

If you need further assistance or have a question please reach out to: