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FTC Bans Non-Compete Clauses, Invalidates Current Clauses Except For Senior Execs
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The Federal Trade Commission issued a final rule prohibiting non-compete clauses
As summarized in the FTC's order, the rule provides that it is an unfair method of competition -- and
therefore a violation of the FTC Act -- for persons to, among other things, enter into non-compete
clauses ("non-competes") with workers on or after the final rule’s effective date (120 days after publication in the federal register).
With respect to
existing non-competes -- i.e., non-competes entered into before the effective date -- the final rule
adopts a different approach for senior executives than for other workers.
For senior executives,
existing non-competes can remain in force, while existing non-competes with other workers are
not enforceable after the effective date.
The final rule defines "worker" as, "a natural person who works or who previously
worked, whether paid or unpaid, without regard to the worker’s title or the worker’s status under
any other State or Federal laws, including, but not limited to, whether the worker is an employee,
independent contractor, extern, intern, volunteer, apprentice, or a sole proprietor who provides a
service to a person."
The final rule does not apply to non-competes entered into by a person pursuant to a bona
fide sale of a business entity
The final rule does not apply where a
cause of action related to a non-compete clause accrued prior to the effective date
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April 23, 2024
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Copyright 2010-24 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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