FTC Non-Compete Ban Faces Legal Challenges but Employers Advised to Prepare

May 20, 2024by admin0

Pregent Law previously posted on the FTC’s final rule announced on April 23rd for a comprehensive ban on any new con-compete agreements with all workers. This new rule would be exempt for existing non-competes with policy-making, senior executives earning more than $151,164. The claim against non-compete agreements is that they violate Section 5 of the Federal Trade Commission Act as an unfair method of competition. Non-compete agreements are generally implemented to protect the intellectual property and trade secrets of companies, but many argue that they are taken too far by hindering the career and financial prospects of many employees. 

If this final rule prevails, it will become effective on September 4th. However, many feel that the rule will be unable to survive recent legal challenges filed in federal court. Regardless, the general consensus is that employers should start preparing as if the rule will prevail. This includes taking an inventory of existing agreements and identifying those still upheld with the new rule. Employers are also advised to shore up their non-disclosure agreements to be used in lieu of non-competes. However, such agreements should be very clear on what is not covered. Specifically, they should not cover employees’ general knowledge, skills, or experience. This is to ensure employees are only restricted to the necessary extent of the law. 

Pregent Law specializes in all matters of employment law. If you need a Massachusetts employment lawyer to review your contract or have other employment-related concerns, I encourage you to contact me for a free consultation.

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