Lake Effect previously blogged about the FTC’s ban on noncompetition agreements. In a game-changing decision for employers, a federal judge in Texas has blocked the FTC’s nationwide ban on noncompetes, which was scheduled to take effect on September 4, 2024. The judge ruled that the FTC lacked substantive rulemaking authority to address unfair methods of competition, and further found the rule to be “unreasonably overbroad without a reasonable explanation.”
On the heels of this decision, employers need not send out employee notices that had been required under the FTC rule. However, employers are well-advised to proceed with a thorough review of current noncompete agreements and related policies. As we recently reported, noncompete agreements remain under threat from other federal and state authorities. As detailed in recent NLRB decisions and General Counsel memoranda, noncompete and nonsolicit provisions aimed at curtailing the rights of non-supervisory employees will be closely scrutinized and potentially nullified under the National Labor Relations Act. In addition, numerous states across the country have completely banned or substantially restricted noncompete agreements, some imposing fines for noncompliance.
Although employers can enjoy a reprieve from the FTC’s nationwide ban, now is not the time to be complacent about the legal status and enforceability of your noncompete and nonsolicit agreements. Reach out to your partners at Lake Effect for assistance in reviewing these important agreements and related policies.
Lake Effect is here to answer all your questions about employment laws, regulations, and new agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.
On the heels of this decision, employers need not send out employee notices that had been required under the FTC rule. However, employers are well-advised to proceed with a thorough review of current noncompete agreements and related policies. As we recently reported, noncompete agreements remain under threat from other federal and state authorities. As detailed in recent NLRB decisions and General Counsel memoranda, noncompete and nonsolicit provisions aimed at curtailing the rights of non-supervisory employees will be closely scrutinized and potentially nullified under the National Labor Relations Act. In addition, numerous states across the country have completely banned or substantially restricted noncompete agreements, some imposing fines for noncompliance.
Although employers can enjoy a reprieve from the FTC’s nationwide ban, now is not the time to be complacent about the legal status and enforceability of your noncompete and nonsolicit agreements. Reach out to your partners at Lake Effect for assistance in reviewing these important agreements and related policies.
Lake Effect is here to answer all your questions about employment laws, regulations, and new agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.
