FTC Issues Rule Banning Noncompete Agreements in 3-2 Vote

By Andrew Lahr
Published April 24, 2024

FTC Issues Ban on Noncompete Agreements

With this move, the FTC hopes to raise wages and add new, quality jobs by creating more competition for talent among employers.

On April 23, 2024, the Federal Trade Commission (FTC) voted to ban noncompete agreements.

What are Noncompete Agreements?

Noncompete agreements – also known as restrictive covenants – are contracts designed to prevent workers from leaving their current employer to work immediately for a competitor, usually by establishing a set amount of time that the employee must wait before beginning work for said competitor.

Why is the FTC Banning Noncompete Agreements?

With this move, the FTC hopes to raise wages and add new, quality jobs by creating more competition for talent among employers. Roughly 30 million people – about 20 percent of the US population – are subject to noncompete agreements. The proposal was approved with a 3-2 vote.

Although the final rule banning noncompetes is a significant action taken to protect employees, it is far from an unexpected move. Banning noncompetes has been a growing trend in recent years, especially in more progressive jurisdictions.

U.S. Chamber of Commerce Leads Charge in Lawsuit Against FTC Rule

The decision, which was expected to be followed by a series of lawsuits, has already been challenged by the Chamber of Commerce, the nation’s largest business lobby. They are joined by a growing number of employers arguing that noncompetes serve an important purpose in protecting an employer’s investment in employees, as well as proprietary information and intellectual property.

GovDocs is monitoring further developments to this story.

Looking for more employment law compliance news? Subscribe to GovDocs Employment Law News.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.

Employment Law Compliance Platform

Keep Informed
with GovDocs Employment Law News

Employment Law Compliance LinkedIn Group

What is GovDocs?

GovDocs simplifies employment law compliance for large, multi-jurisdiction employers in the U.S. and Canada. The GovDocs software platform integrates three solutions in one convenient place to help you master the employment laws impacting your business. Whether you manage labor law postings, minimum wage or paid leave program, our products cut through research time, provide proactive insights into the everchanging landscape of employment laws and reduce the risk of noncompliance. The company is headquartered in Eagan, Minn.

Have fewer than 30 locations? 

The GovDocs Poster Store simplifies posting compliance for employers with less than 30 locations across all industries, offering a variety of posting products to meet your labor law compliance needs.