The Federal Trade Commission (FTC) has issued a final rule that bans nearly all non-compete agreements. The rule will take effect 120 days after publication in the Federal Register, which is scheduled for May 7, 2024.
The final rule prohibits an employer from entering into non-compete clauses with any of its workers, including independent contractors, volunteers, and interns. The rule defines a “non-compete clause” as an agreement restricting a worker’s job opportunities after employment has ended, so an employer could still forbid current employees from working for a competitor.
The rule includes some exceptions. Employers may enforce existing non-compete agreements against senior executives who are in policy-making positions and who earned at least $151,164 during the preceding year. The final rule also has a limited exception for non-compete agreements related to the sale of a business. At least three lawsuits have already been filed to challenge the rule.
CWC has scheduled a Members Only Web Workshop for May 14, 2024.
Members of the Center for Workplace Compliance (CWC), our affiliated nonprofit membership association, can read more here.