Our colleagues Peter Steinmeyer and Erik Weibust at Epstein Becker Green co-authored an article in Thomson Reuters Practical Law, titled “Expert Q&A on the FTC's Final Rule Banning Post-Employment Non-Competes.”
Following is an excerpt (see below to download the full version in PDF format):
On April 24, 2024, the Federal Trade Commission (FTC) announced the issuance of a final rule banning employers from entering into, enforcing, or attempting to enforce post-employment non-compete clauses with workers, subject to limited exceptions, and invalidating all existing non-competes with a narrow exception for certain senior executives. If and when it becomes effective, the FTC's rule would create a new subchapter J, Part 910 of the rules promulgated under Section 5 of the Federal Trade Commission Act (16 C.F.R. §§ 910.1 to 910.6). The premise for the rule is that it "is an unfair method of competition for an employer to enter into or attempt to enter into a non-compete clause with a worker" and therefore falls within the FTC's domain. The Final Rule broadly prohibits traditional post-employment non-competes and is a sea change for employers that routinely use non-competes to protect their valuable assets, including trade secrets and goodwill. The Final Rule is scheduled to be published in the Federal Register on May 7, 2024, and to become effective 120 days later (on or about September 4, 2024).
The Final Rule is being issued after a review and comment period on the FTC's notice of proposed rulemaking (NPRM), about which the FTC received thousands of public comments. The Final Rule largely tracks the NPRM, with a few significant modifications. For more on the NPRM, including grounds for legal challenges to the FTC's authority to issue this rule, see Article, Expert Q&A on the FTC's Proposed Rule Banning Employee Non-Competes.
Practical Law Labor & Employment reached out to Peter A. Steinmeyer and Erik W. Weibust of Epstein Becker & Green, P.C. for their insights about the Final Rule, changes from the FTC's proposed rule, legal challenges to the new rule, and what employers should be doing now to protect their trade secrets and other valuable assets amidst this uncertain legal landscape.
Download the full Q&A in PDF format: "Expert Q&A on the FTC's Final Rule Banning Post-Employment Non-Competes."