FTC Bans Noncompetes: What Employers Need to Know

Overview

The United States Federal Trade Commission (FTC) has recently implemented a new rule banning noncompete agreements for nearly all workers.

Key Points

Effective Date

The ban on new noncompetes will come into effect on September 4, 2024.

Scope

The FTC's rule applies to all employers nationwide, regardless of size or industry.

Existing Noncompetes

Existing noncompetes for senior executives, who represent less than 1% of the workforce, are still valid.

Benefits of the Ban

The FTC estimates that its ban on noncompetes will result in:

• Increased wages for workers
• Increased innovation and entrepreneurship
• A more competitive labor market

Exceptions

There are a few narrow exceptions to the FTC's noncompete ban:

• Noncompetes entered into in connection with the sale of a business
• Noncompetes for the protection of trade secrets