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The FTC Takes a Bite Out of Non-Compete Agreements – By Clayton R. Leonard, Esq.

NCA FTC non compete

On April 23, 2024, the Federal Trade Commission (“FTC”) dealt a significant blow to non-compete agreements in the United States. The commission voted 3-2 to enact a final rule that broadly bans these clauses in employment contracts. While its future remains uncertain with many likely legal challenges arising, this move is expected to have a major impact on employers across the country.

A Crackdown on Restrictions

Non-compete agreements typically restrict employees from working for a competitor or starting their own competing business for a certain period after leaving their current job. Proponents argue these agreements protect trade secrets, confidential information, and client relationships. However, the FTC’s ruling takes the opposite view, asserting that non-competes stifle worker mobility, suppress wages, and limit innovation.

The new rule prohibits employers from entering into any new non-compete agreements with all workers, regardless of position or seniority. This applies to both full-time and part-time employees. The FTC estimates that roughly 30 million Americans, or one in five workers, were subject to non-competes prior to this ruling.

Existing Agreements: A Distinction is Made

The FTC acknowledges that some existing non-compete agreements may continue to be enforced. The rule treats these differently depending on the employee’s status:

Potential Benefits and Concerns

The FTC’s ruling is expected to have a wide-ranging impact on the American workforce. Here is a brief summary of some potential benefits and concerns:



The Road Ahead

The FTC’s ruling on non-compete agreements is a significant development with far-reaching implications. While the potential benefits for worker mobility and innovation are significant, concerns surrounding trade secret protection and legal challenges remain. It is likely to be a lengthy process before the full impact of the ruling becomes clear.


Here are some additional points to consider:

The FTC’s move represents a major shift in the landscape of non-compete agreements. It remains to be seen how businesses, workers, and the courts will adapt to this new reality.

If you have a non-compete agreement and would like to discuss your situation in more detail with one of our experienced attorneys, please contact our office at your convenience to schedule a free no-obligation consultation.


Schedule a free initial consultation today!

Call our office at 702-690-9090, or reach us online.

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