FTC Bans Most Noncompete Agreements

On April 23, 2024, the Federal Trade Commission voted 3-2 to issue a Final Rule that would prohibit most employee noncompete agreements. The Agency first proposed this change in January 2023. The Final Rule is substantially similar to the Proposed Rule, although it does provide a carveout for existing noncompete agreements where the employee qualifies as a “senior executive.” The Final Rule narrowly defines a “senior executive” as an employee who works in a “policy making position” and earns more than $151,164.

The Final Rule will be effective 120 days from its publication in the Federal Register. We anticipate that this new rule will be subject to significant legal challenge prior to its effective date.