Below is an excerpt of a legal update authored by Robinson+Cole’s Ian Clarke-Fisher, Trevor Bradley, and Stephen Aronson.
On April 23, 2024, the Federal Trade Commission (the Commission) voted 3-2 to finalize a rule banning nearly all worker non-compete agreements nationwide (the Final Rule). The Final Rule will have wide-ranging effects for American businesses and their employees as the Commission conservatively estimates that approximately 30 million American workers (which is about one in five) are subject to non-compete agreements.
Absent a successful legal challenge delaying or barring enforcement, companies must comply with the Final Rule by its effective date, which is 120 days following publication of the Rule in the Federal Register.[1] Employers may want to review current agreements with their employees to determine if the Final Rule impacts their agreements. Employers may also wish to consult counsel to revise template agreements to ensure they comply with the Final Rule. Finally, employers that historically have relied on non-compete agreements may want to consider less onerous options to protect their interests, including customer non-solicitation, confidentiality, and non-disclosure agreements.
Below are our five key takeaways from the Final Rule for employers here.