FTC Moves to Ban Noncompete Agreements

What happened: The U.S. Federal Trade Commission (FTC) April 23 announced a final rule implementing a nationwide ban on employee noncompete agreements at for-profit companies. This applies to all workers regardless of job title, classification, or compensation level. It offers a limited exception for existing noncompete agreements with senior-executives holding “policy-making positions” and earning over $151,164 annually. Employers must inform all other employees that existing agreements are invalid. Read ARTBA’s summary of the rule.

Why it matters: Noncompete agreements safeguard proprietary information, client relationships, and financial investments while helping companies ensure a stable workforce, foster continuity and maintain a competitive within the industry. Some ARTBA members have noted noncompete agreements can factor into the valuation of industry firms.

What’s next: The rule takes effect 120 days after publication in the Federal Register, though it is likely to be legally challenged. Contact ARTBA’s Prianka Sharma for more information.