Introduction to the FTC’s Ban on Noncompete Agreements

In a significant move, the FTC bans noncompete agreements – commonly used by employers across various industries – after deeming them to be an unfair method of competition under Section 5 of the FTC Act.

This ruling marks a pivotal change in how restrictive covenants will be treated legally, affecting employers and employees nationwide.


Key Provisions Under the FTC’s Noncompete Ban

The FTC’s decision introduces several important provisions that employers must understand:

  • Senior Executives Clause: Existing non-compete clauses for senior executives, defined as individuals in policy-making positions earning over $151,164 annually, can remain. However, the creation of new agreements for this group is now prohibited.
  • Enforcement Notice Requirement: Employers are required to inform employees affected by non-competes that these clauses will no longer be enforced.
  • Model Notice: The FTC has provided a template notice for employers to use when informing employees about the cessation of non-compete clauses.
  • Exemptions: The rule does not apply to non-competes tied to the sale of a business or those within non-profit organizations and certain franchise relationships.

How the FTC’s Noncompete Ban Affects Your Business

The Final Rule is scheduled to become effective 120 days post-publication in the Federal Register. However, it’s crucial to note that ongoing litigation – such as a recent lawsuit filed in Texas – may delay the implementation of this rule.

Businesses should take proactive steps to ensure compliance:

  • Review Existing Agreements: Identify and revise non-competition agreements that may violate the new rule.
  • Strategize Alternative Protections: Consider how you can use confidentiality and non-solicitation agreements to protect your business and help ensure that any existing provisions are updated accordingly.

FTC’s Model Notice: Communicating Noncompete Changes to Employees


FTC’s Model Notice:
Communicating Noncompete Changes to Employees

The FTC mandates a clear communication strategy for
informing employees about the changes to non-compete clauses.

The official “Model Notice” provided by the FTC reads as follows:

“A new rule enforced by the Federal Trade Commission makes it unlawful for us to enforce a non-compete clause. As of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE], [EMPLOYER NAME] will not enforce any non-compete clause against you.
This means that as of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE]:

You may seek or accept a job with any company or any person—even if they compete with [EMPLOYER NAME].

You may run your own business—even if it competes with [EMPLOYER NAME].
You may compete with [EMPLOYER NAME] following your employment with [EMPLOYER NAME].

The FTC’s new rule does not affect any other terms or conditions of your employment. For more information about the rule, visit ftc.gov/noncompetes.

Complete and accurate translations of the notice in certain languages other than English, including Spanish, Chinese, Arabic, Vietnamese, Tagalog, and Korean, are available at ftc.gov/noncompetes.”


Navigating Compliance: Adapting to the FTC’s Noncompete Regulations

With the landscape of employment law shifting, it is vital for businesses to stay informed and prepared for further developments. Employers should closely monitor updates from the FTC and consult with legal experts to navigate these changes effectively.


The Impact of FTC’s Ban on Noncompete Clauses

The FTC’s ban on noncompete agreements could reshape the competitive dynamics in many industries, offering employees greater freedom while challenging businesses to find new ways to retain top talent.

By understanding and adapting to these regulations, companies can continue to thrive in a changing regulatory environment.

Let’s get to work…


About the Author: Lorisa LaRocca, General Counsel


Lorisa Larocca, General Counsel at TalentBridge

General Counsel Lorisa LaRocca joined TalentBridge after spending 20 years as an attorney with Woods Oviatt Gilman, LLP, in Rochester, New York.

She most recently served as partner and chair of the firm’s labor and employment practice and the firm’s human resources liaison. She was co-founder and co-chair of the firm’s Women’s Initiative Program; founder and past chair of its Great Place to Work Committee; and chair of the firm’s Diversity, Equity and Inclusion Committee.

In 2023, LaRocca also founded Spark HR Consulting, which will now partner with TalentBridge to provide day to day HR counseling and advice, assistance with employment related policies and documents, workforce training and development, DEI strategies and training, benchmarking and compensation analysis, succession planning, risk management and compliance, and more.