Federal Trade Commission Prohibits Employers from Enforcing Noncompete Agreements
On Tuesday, April 23, 2024, the Federal Trade Commission (FTC) voted to ban most noncompete agreements. The ban excludes active non-compete agreements for Senior Executives (those who make more than $151,164 per year and can make policies) but will ban future non-compete for Senior Executives.
The definition of a “policy-making position” according to the FTC is “a business entity’s president, chief executive officer or the equivalent, any other officer of a business entity who has policy-making authority, or any other natural person who has policy-making authority for the business entity similar to an officer with policy-making authority.” Additionally, the FTC defines “policy-making authority” as having the “final authority to make policy decisions that control significant aspects of a business entity or common enterprise and does not include authority limited to advising or exerting influence over such policy decisions or having final authority to make policy decisions for only a subsidiary of or affiliate of a common enterprise.
The final ruling is set to go into effect 120 days after publication in the Federal Register. As updates are made available on this ruling, Encompass will provide the necessary updates.
https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking