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Cantor Colburn Client Alert: FTC Bans Most Employee Non-Compete Agreements
On April 23, 2024, the Federal Trade Commission (“FTC” or “Commission”) voted to finalize the “Non-Compete Clause Rule” (“Rule”), pursuant to its authority under Section 5 of the FTC Act. Non-Compete Clause Final Rule (ftc.gov). Subject to exceptions, the Rule generally states that entering into a non-compete clause with a worker after the Rule’s effective date, including senior executives, is an unfair method of competition. Barring successful legal challenges to the Rule, its effective date will be 120 days from date the Rule is published in the Federal Register.
UPDATE: The final rule was published on Federal Register on May 7, 2024, and barring any challenges, the rule will be effective on September 4, 2024.
Takeaways
There have already been lawsuits instituted against the FTC related to the Rule, one of the first of which, was by Ryan LLC, a global tax services and software provider. Ryan Challenges New Non-Compete Rule Issued by Federal Trade Commission (FTC). While it is unclear at this time how this and other legal challenges will impact the Rule, employers should consider taking steps to be in compliance with the Rule, including with respect to any notice requirements.
For Further Information and Assistance
Attorneys in Cantor Colburn’s Litigation Practice Group and IP Transactional Practice Group have substantial experience representing clients in these types of matters. Primary contacts are:
- Steve Coyle, Partner and Litigation Practice Co-Chair, scoyle@cantorcolburn.com
- Mike Rye, Partner and Litigation Practice Co-Chair, mrye@cantorcolburn.com
- Charlie O’Brien, Partner and IP Transactional Chair, cobrien@cantorcoburn.com
We welcome your questions regarding this matter and any other regarding your IP in general.
This client alert was written by Mumina Egal with contributions from Steve Coyle and Mike Rye.
Please note that each situation has its own unique circumstances and ramifications. This Client Alert is for informational purposes only and is not legal advice.
