The Federal Trade Commission issued a final rule declaring non-compete clauses an unfair method of competition, extending protection to employees, interns, contractors, volunteers and sole proprietors. The rule bans new non-compete agreements and renders most existing non-competes unenforceable, while retaining existing agreements for senior executives who are policy-making employees earning over $151,164. An explicit exception allows non-competes in transactions involving the sale of a business, ownership interest, or substantial assets. Business groups and the U.S. Chamber of Commerce obtained a nationwide injunction from a Texas federal court in July 2024, which paused the rule and left state laws controlling enforcement for now.
The Federal Trade Commission (FTC) has triggered a seismic shift in U.S. labor policy, issuing a final rule that effectively bans new non-compete agreements. Long used to restrict worker mobility, these contracts are now in limbo after immediate legal challenges halted the rule. This guide breaks down what you need to know to protect your business and turn disruption into advantage.
A deep dive into the FTC's final rule The FTC's final rule declares that "non-compete clauses represent an unfair method of competition and therefore violate the FTC Act." This sweeping protection extends beyond employees to interns, contractors, volunteers and sole proprietors, aiming to boost worker mobility and innovation. States are following suit - New York, for example, has proposed banning non-competes for lower-wage workers.
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