Member Alert: FTC Non-Compete Rules Put on Hold by Court

August 21, 2024

 

The Federal Trade Commission’s (FTC) ban on non-compete clause rules, previously set to take effect on September 4, were put on hold by a federal court in Texas. The federal judge set the rules aside, finding that the FTC exceeded its authority in promulgating them. They will not go into effect on September 4. 

As promulgated, the rules would have essentially prohibited most non-compete agreements between an employer and employee, except for non-compete agreements in existence before September 4 between an employer and a “senior executive” as defined by the rules. A “senior executive” is an employee who serves in a policy-making position and makes at least $151,164 per year.

Additionally, the rules would have required employers, by September 4, to provide a template notice to employees with non-compete agreements (except for senior executives with existing non-competes) that their non-compete agreements were no longer valid. Employers now do not have to provide such notice. Employers which have already provided the notice need to revoke previously issued notices if they want the non-competes to continue to be in effect. 

TMA will continue to update members on the status of the FTC rules as they make their way through inevitable appeals.  

For questions regarding non-compete agreements, members can consult TMA’s online Law Guide topic at tnmed.org/lawguide, contact legal@tnmed.org , or call TMA’s 1-800 number, 800-659-1862.