By Wes Lyon, CPA, CFP®
On April 23, 2024, the Federal Trade Commission (FTC) issued their final rule (568 pages) banning most existing and all future noncompete agreements nationwide. The rule will supersede all state statutes and case law dealing with noncompete agreements when it goes into effect, 120 days after being published in the Federal Register. Once the rule goes into effect, employers will be required to provide written notice to employees with noncompetes informing them that they are no longer enforceable.
The rule applies to all workers, whether classified as employees or independent contractors. The FTC ruling defines noncompetition quite broadly, not only encompassing direct restrictions on competition, but also indirect methods such as forcing terminated employees to pay liquidated damages in order to compete.
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