Federal Trade Commission Bans Noncompete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a rule that bans agreements not to compete nationwide. In a press release, FTC Chair Lina Khan stated that, “[t]he FTC's final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

What Alternatives to Noncompetes are Available to Businesses in Alaska?

Trade secret laws and non-disclosure agreements (“NDA”) both provide employers with well-established means to protect proprietary and other sensitive information.  Over 95% of workers currently subject to an agreement not to compete are also subject to an NDA.

Are Senior Executives Still Bound by Noncompetes?

Under the final rule, existing noncompetes for senior executives remain in force. However, employers are prohibited from entering into or enforcing new noncompetes with senior executives. The rule defines a senior executive as any worker earning more than $151,164 annually and who is in a policy-making position.

How Do I Comply with the FTC's New Rule?

The FTC's final rule banning noncompetes eliminate a provision in the proposed rule that would have required employers to legally modify existing noncompetes by formally rescinding them. This change helps streamline the compliance process.  

Under the final rule, employers will simply provide notice to workers bound to an existing noncompete that the noncompete agreement will not be enforced against them in the future. 

When Does the FTC Rule Against Noncompetes Go Into Effect?

The final rule will become effective 120 days after its publication in the federal register.

Knowledgeable Employment Law Attorneys

Whether you're a business that requires assistance in complying with the new rule, or you're an employee who needs advice regarding a separation agreement, Shortell Law LLC can help. Call us today at 907-272-8181.