On Tuesday, April 23, the Fair Trade Commission (FTC) voted in favor of a rule that would ban non-competition agreements nationwide.  The rule has potential far-reaching implications because it would apply retroactively, meaning that it would potentially invalidate the majority of non-compete agreements.  There are only a few potential exemptions to this rule. The rule would become effective on September 4, 2024, and has already been the subject of two lawsuits challenging its validity.

What if I have an existing noncompete?

The final rule takes a distinct stance on existing noncompete agreements, differentiating between senior executives and other employees. Under this rule, existing noncompetes for senior executives can continue to be effective, whereas those for other employees become unenforceable after the rule comes into effect. The final rule estimates that less than 1% of workers fall under the category of senior executives. To be classified as a “senior executive” under this rule, a worker must earn over $151,164 and hold a “policy-making position,” as defined by the rule.

There are alternatives to non-competition agreements to protect your business’s interests. Please contact the attorneys at Bacon Wilson, P.C. to learn potential options to best protect yourself and your business in light of this development.