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Does the new ban on noncompetes affect you?

Are you stuck under the yolk of a noncompete agreement with your current or former employer?

Well, there’s big news that you should know: The Federal Trade Commission (FTC) just effectively banned the vast majority of noncompete agreements – including those already in existence.

What exactly does this mean?

A nationwide ban on noncompete agreements goes into effect on August 21, 2024, which is 120 days after the FTC’s new ruling is published in the Federal Register. At that point, existing non-competes for most workers will no longer be enforceable. Employers are expected to provide notice to workers with existing noncompetes of the change.

Of course, there are always exceptions to the rule. Senior Executives (those workers in policy-making positions and earning more than $151,164 annually) are not affected by the new rule. That’s because it’s generally assumed that they have (and have had) more bargaining power and control over their own contracts than lower-level employees.

It’s also important to realize that even without a noncompete agreement hanging over your head, you may still be subject to other employment agreements that are still enforceable. These include:

  • Non-solicitation clauses, especially those that are narrowly tailored
  • Non-disclosure agreements designed to protect proprietary information
  • Training-repayment agreements designed to protect company investments in personnel
  • Non-recruitment agreements that prevent poaching

In addition, if you violated (or violate) a noncompete agreement prior to the rule’s effective date, you can still be subject to litigation over the breach of contract.

The FTC’s new rule is also likely to be the target of litigation since many business coalitions are not happy about the change. If you’re unsure about your rights and options in the changing legal environment regarding noncompete agreements, it may be wise to seek more tailored information.