The Federal Trade Commission voted 3-2 today to ban noncompete agreements between employers and employees. A full analysis of the final rule will be forthcoming, but key takeaways are:
- Final rule becomes effective 120 days after it is published in the Federal Register.
- All noncompete agreements between employers and “workers,” whether entered into before or after the effective date, will be invalid, unenforceable, and unlawful.
- Noncompete agreements with “Senior Executives” entered into before the effective date are not invalid, unenforceable, or unlawful. “Senior Executives” is defined as someone making more than $151,164 annually and who are in a “policy making position.”
- Does not appear to affect noncompete agreements in the sale of a business context.
- The final rule will almost certainly be challenged and its enforcement during the pendency of that challenge is uncertain.
We look forward to bringing you more information about this groundbreaking final rule in the coming days. If you have questions on how this rule affects you or your business, please reach out to a member of the Jones Walker trade secrets, unfair competition, and noncompetes team.