Major Shift: FTC Prohibits Most Noncompete Clauses in Employment Contracts

ARTICLE | June 25, 2024

Authored by Vasquez + Company

The Federal Trade Commission (FTC) has issued a final rule banning most noncompete agreements nationwide, which is scheduled to take effect in September 2024. This rule comes after extensive public commentary and is expected to impact around 30 million American workers. The article outlines the reasons employers use noncompete agreements, the legal challenges the rule faces, and the limited exceptions and potential benefits for workers. The FTC's decision aims to foster competition and innovation while providing new opportunities for employees.

Key Points:

  • Scope: The ban will affect most noncompete agreements, with exceptions for certain senior executives and specific industries.
  • Employer Options: Companies can still use trade secret laws and nondisclosure agreements to protect proprietary information.
  • Worker Benefits: The FTC anticipates the rule will lead to job creation, increased earnings, lower healthcare costs, and more innovation.

For more information, read the full article here.