The following is part of our annual publication Selected Issues for Boards of Directors in 2025. Explore all topics or download the PDF.
In 2024, two federal agencies saw challenges to their regulations restricting non-compete agreements, while several states enhanced restrictions or proposed amendments expanding existing non-compete laws. The scope and impact of these developments are likely to be further clarified as legislation and new case law develops.
Link to FTC Rule FTC Rule
In early 2024, the Federal Trade Commission (FTC) issued a final rule banning most existing and new non-competes, broadly including any covenant or mix of covenants that “function to prevent a worker from joining a competitor.”[1] The rule covered all U.S. employees, including senior executives, with exceptions for (i) non-competes entered into in connection with the bona fide sale of a business; (ii) existing non-competes with senior executives, defined as workers in a “policy-making position” who earn more than $151,164 annually; and (iii) contracts between a franchisee and a franchisor. The rule also required that employers provide notice to workers who are subject to a non-compete provision that the non-compete will not and cannot legally be enforced against them.