Blog
Employment Updates: FTC’s Final Non-Compete Rule
- By: Ben Hawkins
- On: 05/02/2024 16:22:56
- In: Workforce
The Federal Trade Commission has enacted a final regulation aimed at fostering competition by instituting a nationwide prohibition on noncompete agreements. According to FTC Chair Lina M. Khan, these clauses stifle wage growth, stymie innovation, and hinder the dynamism of the American economy, which could otherwise benefit from the establishment of over 8,500 new startups annually with the absence of noncompetes. Khan emphasized that the FTC's measure aims to grant individuals the freedom to explore new employment opportunities, launch businesses, and introduce fresh concepts to the market.
Once in effect, the regulation will bar the implementation of new non-competes and invalidate existing ones, though there will be some exceptions, notably for a specific group of senior executives bound by prior agreements. Additionally, the rule includes a provision regarding the sale of businesses.
Adopted on April 23, the FTC rule will come into force 120 days following its publication in the Federal Register. However, numerous legal challenges have already been initiated at the federal level, contesting both the FTC's authority to establish the rule and its validity on various grounds. Some of these lawsuits seek court intervention to halt the implementation of the FTC rule until the underlying legal disputes are resolved.
Staff contact: bhawkins@mehca.org
Staff contact: bhawkins@mehca.org