The Federal Trade Commission (FTC) voted to issue a rule banning non-compete clauses on April 23rd, 2024. The rule is set to go into effect on September 4, 2024. Under the rule, according to the FTC, non-competes are arrangements that prohibit, penalize, or functionally prevent a worker from getting a new job or starting a business after leaving their employment. In short, the rule bans employers from entering into non-competes with workers covered by this definition. CIRT opposed the adoption and implementation of this rule, that also makes unenforceable most existing non-competes, except for existing non-competes with senior executives and situations where the non-compete was allegedly breached before the effective date.
To help businesses understand what this rule means for them and how to comply, the FTC has prepared a business and small entity compliance guide. The guide contains step by step instructions for complying along with FAQs further explaining the rule. Additionally, the FTC recorded a compliance webinar for businesses on May 14th, and you can access the video and transcript at https://www.ftc.gov/news-events/events/2024/05/ftc-compliance-webinar-final-noncompetes-rule.
CIRT members can also access the final rule on the FTC website and in this fact sheet. In particular, the text of the rule and model notices that you can use to comply with the rule’s notice requirement are available on the FTC website. You can also contact the FTC at noncompete@ftc.gov if you have further questions.
LEGAL CHALLENGE to FTC:
Currently, the FTC final rule is under legal challenge in Federal Court (Texas District), which will most likely delay the rule’s implementation, regardless of the ultimate outcome.
