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Human Resources

U.S. Federal Trade Commission

By Accounting Resources May 13, 2024

U.S. Federal Trade Commission

Ban on Non-Compete Agreements

Also on April 23, 2024, the US Federal Trade Commission (FTC) banned for-profit employers throughout the country from using Non-Compete Agreements. This rule makes existing Non-Compete Agreements unenforceable after it becomes effective (which date is currently nebulous, set at 120 days after publication in the Federal Register). The FTC provided an exception for Non-Compete Agreements for Senior Executives, defined as individuals in a policy-making position for the business who earn more than $151,164 annually. Should this rule become effective, employers must provide a notice to all employees who are bound by Non-Compete Agreements that their Agreement is no longer enforceable.

As noted above, this rule was created by the FTC, not the federal Department of Labor or a legislative body. Legal challenges to this rule are imminent, with the U.S. Chamber of Commerce already preparing its suit. Whether the FTC has the authority to make this rule is the subject of that challenge, with the Chamber arguing that it does not.

Action Required: All employers should await further guidance on the enforceability of this rule and refrain from taking action at this time regarding any Non-Compete Agreements in place. ARI HR is monitoring the status of these legal challenges and will update all clients as they are adjudicated.

 

As this change takes effect, the ARI Human Resources Team is here to help you interpret guidelines and regulations, to review your current polices, revise polices as necessary, and to any questions you may have. If you would like to learn more about how we can help support your business, contact us.

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