On April 23rd the Federal Trade Commission (FTC) announced a rule that bans non-compete agreements. This rule is to go into effect in 120 days. For the FTC non-compete rule fact sheet, click here.

The goal if the ban is to protect worker’s fundamental freedom to change jobs, increase innovation and foster new business formation.

Non-compete agreements impose conditions on workers that make it difficult for them to leave their jobs, obtain new jobs or start a new business. As a result, people are forced to switch industries, relocate, take lower paying roles, leave the workforce, delay the onset of starting a new business or engage in costly litigation.

Under the new rule, once it takes effect, existing non-competes for senior executives will still remain enforceable, but employers will be precluded from entering into or attempting to enforce any new non-compete agreements. Per the FTC rule, senior executives are those that earn more that $151,164 annually and who are in policy making positions.

Employers are required to provide notice, other than to senior executives, that they will not be enforcing the non-compete agreements. The FTC has provided model language (in various languages) that employers can use to notify its workers. Click here to see this language.

Contact Sheree Donath, to understand your agreements, including those with non-compete language. These documents are important when making a career transition and should be reviewed and understood as sometimes they are not stand along documents and other provisions may still apply.

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