We wanted to inform you of some significant changes regarding the non-compete agreements as they may impact your business procedures. As a reminder, a non-compete is an agreement between an employer and employee that restricts certain geographic areas, industries, or competitors for a specific period following an employee’s departure from your company.
Here are some of the key points you need to know about the new rules:
Effective Date:
The final rule is set to go into effect 120 days after its publication in the Federal Register. However, please note that a lawsuit could potentially delay this timeline.
Legal Challenges:
The rule has already faced challenges in court from several organizations. Critics argue that the Federal Trade Commission (FTC) may be overstepping its authority with this rule.
Exceptions:
The rule includes exceptions for senior executives, defined as individuals in policy-making positions with a compensation of at least $151,164 in the preceding year.
Sale of Business:
Non-compete provisions related to the sale of a business are not affected by the new rule.
Model Language:
The rule provides model language to inform employees that their non-compete agreements are no longer valid and enforceable. However, we advise against using this language until the rule officially takes effect, as legal outcomes may impact its validity.
FTC vs. NLRB:
It’s important to note that the FTC is not the only agency challenging non-compete agreements. The National Labor Relations Board (NLRB) has issued guidance suggesting that such provisions may violate the National Labor Relations Act unless justified by specific circumstances.
We understand that navigating the complexities of these laws can be challenging, so we recommend you speak with legal counsel to ensure compliance. However, we are here to support you however we can so please do not hesitate to reach out with any questions. You can reach me at [email protected] or 330-759-8522 x 2131.