Yesterday, the Federal Trade Commission (FTC) voted 3-2 to approve a final rule banning non-compete agreements nationwide. The rule goes into effect 120 days after it has been published in the Federal Register.

The expectation is that it will be challenged in court based on claims that the FTC exceeded its authority. That lawsuit is expected to seek a temporary restraining order to prevent enforcement until a final court determination.

A few key provisions of the rule are:

A Prohibition against new non-competes after the effective date, including non-compete agreements with senior executives (employees earning more than $151,164/year in a “policy-making position”). Existing non-compete agreements with senior executives mayremain in force.

Voiding other existing non-compete agreements as of the effective date and requiring employers to give current and past employees notice that the employer will not enforce such agreements.

Allowed activities under the new rule

·    Prohibiting competition of current employees while employed

·    Prohibitions on non-solicitation

·    Protection of proprietary information owned by the employer

·    Non-compete agreements when selling a business

Below is the link to the “Fact Sheet on the FTC’s Non-Compete Rule.”