FTC Bans Noncompete Agreements For New and Existing Employees Across All Industries

Tearing up noncompete agreement

What You Need to Know

The Federal Trade Commission took a significant step on Tuesday by banning noncompete agreements for the majority of U.S. workers through a new rule. This regulation prevents employers from enforcing clauses that hinder workers from changing employers within their industry, a practice the agency believes harms wage levels and disrupts labor markets.

Under the new rule, it is now unlawful for employers to include noncompete agreements in employment contracts. Furthermore, companies currently utilizing such agreements must inform workers that they are no longer valid. Specifically, regarding new employment contracts, the final rule deems it unfair competition—and a violation of Section 5 of the FTC Act—for employers to engage in noncompete agreements with workers after the effective date. For existing employment contracts containing noncompete provisions, the final rule establishes different considerations for senior executives compared to other workers.

This regulation will become effective after 120 days. However, business groups have pledged to challenge it in court, potentially leading to delays in its implementation.

Contact Berberian Law to Figure Out If or How This May Impact You

What does this mean for you? Contact Berberian Law to find out! Whether you're an employer navigating the ban or an employee concerned about potential violations of your rights, Berberian Law is here to provide guidance and support.