On April 23, 2024, the Federal Trade Commission (FTC) voted to approve the final Non-Compete Clause Rule (Final Rule), effectively banning most forms of non-compete agreements. The Final Rule, if enacted as written, deems all existing post-employment non-compete agreements unenforceable for all workers except senior executives and prohibits employers from entering into new post-employment noncompete agreements after the effective date for all workers, including senior executives. Senior executives are defined as workers who are in a “policy-making position” (i.e., those who have policy decision-making authority for the entire company such as a company president or CEO) and earn a total annual compensation of at least $151,164 per year. The Final Rule was published in the Federal Register on May 7, 2024, and is scheduled to take effect Sept. 4, 2024.

However, employers should not abandon their non-compete agreements just yet. The Final Rule is already being challenged in several courts which may delay, limit or prohibit its implementation (see Ryan v. Federal Trade Commission, No. 3:24-cv-986 (N.D. Tex. April 23, 2024); Chamber of Commerce of United States, et al. v. Federal Trade Commission, et al., No. 6:24-cv-00148 (E.D. Tex. April 24, 2024); ATS Tree Services v. Federal Trade Commission, et al., No. 2:24-cv-1743 (E.D. Pa. April 25, 2024)).