The Future of Non-Compete Agreements

On April 23, the Federal Trade Commission (“FTC”) issued a final rule banning non-competition agreements nationwide. The rule was based on the FTC’s determination that non-competition agreements are an unfair method of competition and a violation of the FTC Act.

The final rule prohibits employers from entering into or enforcing new noncompete agreements. Existing agreements cannot be enforced unless the employee is a “senior executive” in a “policy-making position” earning more than $151,164 annually.

The FTC rule will become effective 120 days after publication in the Federal Register; however, it is important to note that no changes should be expected immediately. Legal challenges to the new rule were filed immediately, and it is likely that a court will prevent the rule from being issued until the legal cases are resolved.

While the future of non-compete agreements is uncertain, for now, both employers and employees should assume that their existing agreement remains intact. For assistance with your employment agreement, contact our office today.