On April 23, 2024, the Federal Trade Commission (FTC) issued a final rule to ban non-competes nationwide. The FTC says that banning non-competes have the freedom to pursue a new job, start a new business, or bring new ideas to market. The FTC estimates that this will result in more than 8,500 businesses being created each year. The Commission found that noncompetes tend to negatively affect competitive conditions in labor markets by inhibiting efficient matching between workers and employers.

The Commission found that employers have several alternatives to noncompetes that still enable firms to protect their investments without having to enforce a noncompete. Trade secret laws and non-disclosure agreements (NDAs) both provide employers with well-established means to protect proprietary and other sensitive information. Researchers estimate that over 95% of workers with a noncompete already have an NDA.

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

Importantly, the ban is NOT in effect yet and might not ever go into effect as there is already at least one lawsuit seeking to halt the ban. The ban will not become effective before the end of August at the earliest. Stay tuned!