FTC Noncompete Ban Resources
On April 23, 2024, the US Federal Trade Commission (FTC) has implemented a comprehensive ban on post-employment noncompete agreements for workers – with a few narrow exceptions – aiming to enhance labor market competition, increase wages and foster innovation.
The ban encompasses various types of agreements that restrict workers from seeking alternative employment or starting their own businesses.
Watch the webinar: Cooley partner Ryan Vann shares his initial reactions to the ban and what could come next.
What does this mean?
All US post-employment noncompete agreements with workers will be prohibited beginning on the ban’s effective date, which – barring a court ruling delaying or invalidating the ban – is expected to be in late August or early September 2024.
What the rule doesn’t affect:
- Existing noncompetes with senior executives
- Nonsolicitation/nondisclosure agreements
- In-term noncompetes
- Employers not subject to the FTC Act
- Franchise contracts or sale of a business
The ban on existing noncompete agreements with senior executives is for those who earn more than $151,164 annually and are in “policy-making positions” – but new agreements with such high-ranking individuals will be subject to the prohibition.
What should employers do?
Employers should hold steady as the ban works its way through the court system, which is likely to take some time. Now is an excellent time for companies to evaluate their use of noncompetes – including weighing the business necessity and availability of alternatives.
Read more here: For a deep dive into the ban, check out our April 2024, July 2024 and August 2024 alerts on the topic.
Insights
Texas Court Blocks FTC’s Noncompete Ban
On August 20, 2024, the Northern District of Texas in Ryan LLC v. Federal Trade Commission issued an order blocking the FTC rule banning all post-employment noncompete agreements with workers from taking effect on September 4, 2024. Unlike the court’s preliminary injunction ruling in early July, which enjoined the rule as to only the five plaintiffs in the case, Judge Ada Brown’s most recent merits decision blocked the rule from taking effect on a nationwide basis. Therefore, all employers using noncompete agreements will not be subject to the ban on September 4, and will not need to comply with the rule’s notice and other requirements.
FTC Passes Sweeping Noncompete Ban
On April 23, 2024, the FTC voted 3 – 2 in favor of banning all post-employment noncompete agreements, which will impact employers across the US. This client alert shares details on how far the ban reaches, the exceptions and notice requirements, as well as how violations may be handled and how some entities have responded to the proposed final rule.
Webinars
What to Know About the FTC’s Noncompete Ban (On demand)
The FTC noncompete ban is already subject to litigation that could delay implementation or cancel the rule entirely. On April 24, 2024, Cooley partner Ryan Vann discussed the current state of affairs and what to expect for next steps as litigation unfolds.
Additional resources
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