FTC Bans Non-Competes

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This week, the same week I turned 62, D Magazine came out with its “Best Lawyers List” for 2024. After nearly 4 decades of nonstop litigation work, seeing my name on the list is mostly comforting because it is some assurance I am not dead yet.

Not that 62 is that old. I honestly feel I could do this another 30 years. Instead, I feel more like Captain Hook in Peter Pan, who has a crocodile chasing him with a ticking clock in its belly, representing mortality. It’s already eaten a piece of him, and the “tick, tick ticking” reminds the anti-hero Hook, that he has no idea when mortality is coming back to get the rest.

Oh. . . and also this week, the FTC banned non-competes.

FTC Bans Non-Competes. I have been put out of business twice in my life by changes in the law. The first was workers compensation. Which is a kind of health law, though I didn’t know it at the time. Worker’s Comp was the kind of case firms would assign a kid out of law school, because the stakes are so low, it would be hard to screw it up in any way that matters.

Then, they changed the law on Medical Malpractice, meaning nobody was suing doctors and there was no need for me to defend them. But the one good thing about knowing how to try cases, is that it is a skill that can transfer to any other sort of litigation. Like non-compete litigation in healthcare cases. So I learned that.

Then, “tick, tick, tick” the FTC just gobbled that up too.

The new rule has several features:

  • It does not affect non-competes in the sale of a business
  • It invalidates existing non-compete clauses for low-level employees
  • It does not invalidate any causes of action that accrued before the effective date
  • It grandfathers in any executive non-competes which exist at the time the rule becomes effective, which is 120 days after published in the federal register
  • Executives are $151,164 annually and who are in policy-making positions
  • It could be blocked by litigation over the FTC’s authority
  • Exiting state non-compete laws which are more restrictive on non-competes could remain in effect. Otherwise, they are preempted.
  • It wouldn’t affect Trade Secret theft and other NDA protections for confidential information.
  • Employers must notify workers that non-competes are invalid, rather than re-draft existing contracts.

You can find the rule at FTC.gov by Googling “FTC Final Rule Non-competes.”