A copy of the FTC Press Release notice may be viewed at: FTC Press Release 2024-04-23. A Wall Street Journal article from yesterday on the new rule may be found at: WSJ, FTC Bans Noncompete Agreements That Restrict Job Switching.
While this is something to take note of for those in industries where non-compete clauses are common such as the securities industry, nobody should react too quickly. The FTC’s vote was only 3-2. There are likely to be significant legal challenges to this ban. Already this morning it is reported that business groups are lining up to fight the new regulations. WSJ, Business Groups Race to Block FTC’s Ban on Noncompete Agreements. If a stay is issued in light of the legal challenges, then a quick reaction to the decision could be premature.
Also, the ban does not go into play for 120 days following the publication of the final rules (not the vote). So, no immediate action is appropriate while we wait to see what legal challenges occur. We will continue to monitor this legislation as it is so important to our securities industry clients and will keep you apprised of developments.