The Federal Trade Commission (“FTC”) recently issued a rule adopting a comprehensive ban on new non-compete agreements for workers, including senior executives. The FTC’s final rule provides that it is an unfair method of competition for employers to enter into non-competes with workers. The rule becomes effective on September 4, 2024.
For senior executives, existing non-competes may remain in force (though employers may not enter into new non-competes with senior executives). The FTC’s rule defines the term “senior executive” to refer to workers earning more than $151,164 who are in a “policy-making position.” Existing non-competes with workers other than senior executives are not enforceable as of September 4. Employers will be required to provide notice to workers other than senior executives who are bound by an existing non-compete that they will not be enforcing any non-competes against them. The FTC’s rule preempts any conflicting state laws.
