Legal Brief: FTC Moves to Ban Non-Compete Agreements

June 20, 2024
Security Business Magazine

Types : Bylined Articles

Integrators remain in a holding pattern until law and challenges are finalized

Sometimes an employee is so valuable that you do not want him or her to work for a competitor. An integrator may ask that, as a condition of employment, they agree not to compete with the business after departing. Historically, such non-compete agreements have been governed by state laws that vary widely across jurisdictions; however, a new rule recently announced by the Federal Trade Commission (FTC) seeks to change the competitive landscape.

In one of its most significant initiatives since its founding, the FTC announced a final rule in late April 2024 banning employers from entering into, enforcing, or attempting to enforce post-employment non-compete clauses with workers, subject to limited exceptions; thus, invalidating all existing non-competes with a narrow exception for certain senior executives and the bona fide sale of a business. This rule won’t be effective until Sept. 4, 2024, but it is already facing legal challenges in court.