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Ban of Noncompete Agreements

The Federal Trade Commission (FTC) is implementing a new rule that bans the use of noncompete agreements, and nullifies all previous noncompete agreements, which will take effect 120 days after its publication in the Federal Register on April 24, 2024. This means that as of now the rule is expected to go into effect in late August 2024. Employers need to understand and comply with these changes to avoid legal repercussions.


In summary, the FTC's new rule banning noncompete agreements will go into effect in late August 2024. Employers should review existing agreements, stop enforcement, and make necessary changes to comply with the new rule. Doing so will help you avoid legal complications and foster a positive workplace environment.


Read It Here

What You Must Do & When:

  • Review Current Agreements: Examine any existing noncompete agreements in your business to identify which agreements are subject to the new FTC rule.

  • End Enforcement: Stop enforcing noncompete agreements for current or former employees that will be prohibited by the new rule.

  • Communicate with Employees, Former and Current: Inform past and present employees covered by noncompete agreements about the changes and any modifications to or rescissions of their agreements.

  • Update Employment Contracts: Remove or modify any noncompete clauses in your employment contracts to comply with the new rule.

  • Comply by Late August 2024: Ensure your business is fully compliant with the FTC's ban of noncompete agreements by the effective date.

  • Consult Legal Counsel: Consider consulting with legal counsel to ensure you understand the specific requirements of the new rule and how they apply to your business.

Why You Must Do It:

  • Legal Compliance: Adhering to the FTC's ban on noncompete agreements will help you avoid legal penalties and potential enforcement actions.

  • Employee Mobility: Removing noncompete clauses will allow employees more freedom to pursue other job opportunities, which can positively impact your business's reputation.

  • Innovation and Competition: Allowing employees to move freely between jobs can lead to increased innovation and healthy competition within industries.

  • Workplace Morale: Employees may feel more valued and empowered when they know they are free to pursue other career opportunities without restrictive agreements.

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