FTC Bans Noncompete Agreements Set to Take Effect September 4, 2024

The Federal Trade Commission (FTC) has issued a final rule that promotes competition by banning noncompete agreements nationwide (with few exceptions). The FTC has announced that the final rule will be published in the Federal Register on May 7, 2024, meaning the rule will take effect on September 4, 2024.

Note, however, that many experts believe that legal challenges will likely result in delays to the effective date of the final rule. We will continue updating you as this issue continues to evolve.

Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. Existing noncompetes for “senior executives — i.e., those workers who are (1) in a “policy-making position”; and (2) earning an actual or annualized sum of $151,164 — can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives. 

Employers are required to provide notice to workers other than senior executives who are bound by an existing noncompete that they will not be enforcing any noncompetes against them. The FTC has included model language in the final rule that employers can use to communicate to workers.

The final rule will become effective 120 days after publication in the Federal Register.