By now, you have had a flood of emails about the Federal Trade Commission’s (FTC) proposed rule to ban non-competes. And you may be asking: is this really important or can I go back to my lengthy 2023 To Do List? Short answer: Add this issue to your list and put it at the top.
THE PROPOSED FTC RULE: Claiming Non Compete clauses hurt workers, the rule generally prohibits Non Compete agreements or clauses. It is illegal to enter into or attempt to enter into a non compete with a worker. The rule applies to ALL employers and the definition of worker is very broad.
Are Current Non-Competes Safe? No, non competes entered into before the compliance date must be rescinded by the compliance date of the rule, below. To rescind the current non-competes, the FTC provides model language.
Only Non-Competes Are Banned? Yes unless you have contract language or non-disclosures that are broad, restrictive or otherwise function like a non compete.
Does This Supersede State Laws? Any state law that affords greater protection than the FTC rule would remain. In other words, the FTC rule is the floor, not the ceiling here.
Can An Employee Sue Us Under This Rule? The FTC enforces this rule and it does not create a separate legal action for employees.
How Much Time Do We Have? The Rule goes into effect 60 days after the final rule is made (which is after comment period) and employers have 180 days after that to comply. BUT there will be lawsuits in an attempt to block this rule.
WHAT SHOULD I DO? The sea change against non-competes in the state laws and the courts now moves to the federal government. Non-competes are under attack. Take a look at your non-competes or call us to do that. All is not lost! There are other, safer ways to protect your business interests that we have been creating for years now. We can help your organization like we have for thousands over the years. Contact us.