As we previously reported, the Federal Trade Commission (“FTC”) issued its final rule on April 23, 2024, banning noncompetition agreements and related provisions. The rule will take effect on September 4, 2024, 120 days after publication in the Federal Register. As of September 4th, employers who have employees under existing noncompete agreements and related provisions, including nonsolicitation of employees and possibly provisions such as claw backs of training pay or a signing bonus , will be required to provide an explicit notice to those employees that their agreements and policies are no longer enforceable (see the FTC’s model notice here).
There is a narrow exception to the ban for senior executives who have existing agreements. Senior executives are defined as workers who earn more than $151,164 annually and who are in “policy-making positions” i.e., an organization’s president, CEO, or the equivalent, or a personal with final authority to make policy decisions controlling significant aspects of an entity. Noncompetes entered into pursuant to the bona fide sale of business entity are also excluded from the ban. There are also exemptions for certain entities, such as financial institutions and nonprofits.
