On April 23, the Federal Trade Commission (FTC) by a 3-2 vote approved a noncompete rule, which will impact all industries and adopt a comprehensive ban on new noncompetes with all workers, including senior executives. The final rule provides that it is an unfair method of competition—and therefore a violation of Section 5—for employers to enter into noncompetes with workers.
For existing noncompetes, the final rule adopts a different approach for senior executives than for other workers. For senior executives, existing noncompetes can remain in force.
Existing noncompetes with workers other than senior executives are not enforceable after the effective date. The final rule will become effective 120 days after publication in the Federal Register.
- Read a summary and analysis of the rule by Buchanan Ingersoll & Rooney.
- Read the US Chamber of Commerce press release vowing to sue to block this unlawful rule.
- View ARA comments to FTC raising concerns and questioning the agency’s authority to issue such a regulation as this employer-employee contract related agreement has typically been regulated by states.
