FTC Votes ‘YES’ on Nationwide Noncompete Ban

The Federal Trade Commission (FTC) recently voted to ban almost all existing and future noncompete agreements. The Final Rule states that noncompetes are considered an unfair method of competition that violates Section 5 of the FTC Act. 

The ban will not apply to noncompetes held by senior executives. The Final Rule defines a senior executive as someone earning more than $151,164 annually and holds a policy making position. The ban will also not apply to those involved in the sale of a business entity. 

Potomac Legal Group has counseled clients with noncompetes and represented clients facing legal action from former employers for violating noncompete agreements by working for competing employers.

Employers must notify workers of their noncompete’s unenforceability and companies cannot attempt to enter workers into future noncompetes. 

Potomac Legal Group is currently available to assist employees in determining whether their noncompete is indeed unenforceable, as well as the actions they should expect their employer to take in informing them of the unenforceability. 

Companies will need to provide workers with “clear and conspicuous notice” by the ban’s effective date. Suspected violations of the noncompete ban can be reported to the FTC’s Bureau of Non-Competition. The ban becomes effective 120 days after the Final Rule is published in the Federal Register. 

The FTC believes that the noncompete ban will offer a myriad of benefits to workers and the economy, including reduced healthcare costs, formation of new businesses, rises in the innovation of intellectual property, and higher employment earnings.  

The FTC began researching into the effects of noncompetes on the employment market and free competition in 2018. The 568-page Final Rule claims that noncompetes tend to impede access to labor, thereby harming workers, consumers, and competitive conditions. State laws will be preempted if they directly conflict with the Final Rule, but states can impose greater restrictions on noncompetes. 

To learn more about how the new noncompete ban may affect your employment, contact the attorneys at Potomac Legal Group.