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The FTC today announced its final rule prohibiting nearly all noncompete agreements. Assuming the new rule takes effect, employers will be prohibited from entering into any new noncompete agreements and most existing noncompetes will become unenforceable. The rule covers employees and other workers including independent contractors. Employers will be required to notify workers subject to existing noncompete agreements that they will not enforce the noncompete terms in the future; the rule provides a model notice.  There is a narrow exception for existing agreements (and agreements entered into prior to the effective date of the new rule) between employers and senior executives who earn more than $151,164 annually and who are in policy-making positions. The rule permits some noncompetes entered into in connection with the sale of a business, does not apply where a cause of action related to a noncompete accrues prior to the effective date, and appears to permit agreements that restrict competition during the term of a worker’s employment. The new restrictions will become effective 120 days after publication in the Federal Register.    

On 4/23/24, the FTC ruled to ban non-compete agreements for employees and independent contractors.  The rule goes into effect 120 days following publication in the Federal Register and makes all existing noncompete agreements invalid (except in limited circumstances). Employers are also required to notify current and former workers that their noncompete clauses are no longer in effect: https://lnkd.in/gRRYHW2r

The recent FTC decision to ban non-compete agreements for nearly all jobs is a significant step towards promoting worker mobility and fostering innovation. This move has its pros and cons. On the positive side, banning non-compete clauses allows employees to seek better job opportunities without restrictions, encouraging competition and talent sharing across industries. However, some businesses might argue that non-compete agreements protect their proprietary information and investment in employee training. Despite these concerns, this decision leans towards a more open and flexible job market, ultimately benefiting workers by providing greater freedom to pursue new career paths without legal constraints. Check out the full article for more details. https://lnkd.in/gjyQBhRE

WHAT I LEARNED IN HR: NO MORE NON-COMPETES? This is big. US employers may soon be prohibited from entering or enforcing noncompete clauses, according to a final rule passed by the Federal Trade Commission. The US Chamber of Commerce has already indicated its intent to challenge the new rule in court. If this rule goes into effect, it will be an unfair method of competition for an employer to enter or maintain a noncompete agreement with any employee, except for senior executives. The new rule also requires employers to rescind existing noncompete agreements and actively notify workers that they are no longer in effect. The FTC estimates that banning noncompete agreements would cost employers $250 billion to $296 billion per year in increased compensation expenses. This new rule does not apply to agreements banning employees from soliciting your employees or disclosing or using your trade secrets. Stay tuned. #NoncompeteAgreements #FTC #LaborMarket #Competition

Much has been said about the recent ruling by the F.T.C. on non-compete clauses, and I have to say, I wholeheartedly support it. As someone who has dealt with these clauses throughout my professional career, I can attest to their restrictiveness and one-sidedness. They have hindered my opportunities to advance my career more times than once. In fact, during my current job search, I've had to pass on two positions I was qualified for because of my current non-compete clause. I firmly believe that if a company requires a non-compete clause that forces an employee to sit out for a year, that company should compensate the employee for that year of lost income. While it's unlikely that many companies will agree to this, I have worked for a company that did agree to pay for a year of my salary in exchange for signing a non-compete clause. It speaks volumes about a company's commitment to its employees when they are willing to take this step. There are still a few hurdles to jump before this ruling goes into effect, but I'll be keeping a close eye on it. What has your experience been with non-compete clauses? #noncompete #careeradvancement #FTC

The FTC has voted to ban nearly all Non-competes across the Country! My Brother is actively battling an ex-employer (with the help of his new employer's legal team) to break free of an overly restrictive non-compete. Earlier in my career, I too was bound by a highly restrictive non-compete that only served to chain me to a toxic workplace. Today, I'm fortunate enough to work for Cypress HCM, who has never limited my professional freedom (just the opposite actually). My hope with this ruling is that, by eliminating these highly restrictive Non-Competes, employers will be incentivized to offer better workplaces and environments to attract and retain top talent as opposed to legally restraining them. https://lnkd.in/e_HZux-g

hallelujah In a significant regulatory shift, the Federal Trade Commission (FTC) has voted to ban nearly all noncompete agreements in employment contracts, a move aimed at enhancing economic freedom and mobility for workers. Chair Lina Khan highlighted the impact of noncompetes on workers, citing examples of employees trapped in abusive workplaces or unable to leave jobs due to conflicting religious principles. Khan emphasized that restricting economic liberty also infringes on other personal freedoms. The FTC estimates that about 30 million Americans are bound by noncompetes, and eliminating these agreements could potentially increase wages by nearly $300 billion annually as workers gain the ability to switch jobs more freely. The ban, set to take effect later this year, exempts existing noncompete agreements for senior executives, deemed more likely to have been negotiated. However, it urges employers not to enforce other existing noncompetes. The decision passed with a 3 to 2 vote along party lines, with dissenters Melissa Holyoak and Andrew Ferguson arguing that the FTC exceeded its authority. Holyoak predicted that the ban would face legal challenges and could be overturned in court. The U.S. Chamber of Commerce quickly announced its intention to sue, describing the rule as an unlawful overreach and a threat to business interests and the economy. The Chamber of Commerce contends that noncompetes are crucial for protecting trade secrets and incentivizing investment in employee training and development. Suzanne P. Clark, president and CEO of the U.S. Chamber, expressed concerns that the decision sets a dangerous precedent for government interference in business operations, potentially harming employers, workers, and the broader economy. Despite these objections, the FTC's ruling reflects a broader push to enhance worker rights and economic flexibility in the labor market.

The FTC Noncompete Ban is still set to take effect Sept. 4 and invalidates nearly all existing noncompete agreements and bars employers from entering into future agreements. Here's what you need to know! #laborlaw #HR https://lnkd.in/eErUiFuY

What Does the September 4 Effective Date of the FTC Ban on Non-competes Mean for Employees and Employers? Not Much….. Employers, worried about the Federal Trade Commission's (FTC) new rule banning most non-compete agreements on September 4, 2024? Don’t be. While this rule will largely prohibit employers from entering into non-compete agreements with workers, including senior executives, the implementation of this rule is currently facing significant legal challenges which will likely lead to the postponement of its enforcement for the next 12-18 months. Legal experts opine that these challenges will ultimately lead to the enjoinment of the rule. Various lawsuits have been filed against the FTC, arguing that the rule exceeds the agency's authority. Courts have issued conflicting decisions, with some temporarily blocking the rule's enforcement in certain jurisdictions (Texas and Pennsylvania the most recent). The outcome of these legal battles could influence whether and how the rule will be applied nationwide. Ongoing challenges to the new rule may affect the use of non-compete agreements in protecting employers' legitimate business interests. At a minimum, closely monitor these legal challenges, as I suspect we are witnessing a general trend against non-competition agreements (although a good attorney will find legal ways around these restrictions to accomplish the same objective). This may take a few years, but for now, those in favor of non-competes can rest easy. This of course does not impact Massachusetts’ employers who are subject to the Massachusetts Non-Competition Agreement Act (MNAA). For further details and updates, you can visit the FTC's official page -