Recent Developments: FTC Rule Banning Noncompetes

A federal judge has struck down the Federal Trade Commission (FTC) rule banning noncompetes nationwide. This ruling has brought the situation back to the status quo, meaning that, for now, existing noncompete agreements remain enforceable and employers are not required to notify employees that their noncompetes are no longer in effect.

What This Means for Employers:

• No Immediate Action Required: Employers who were preparing to inform their employees about the rule change can now pause those efforts. The ruling means no changes need to be made until further notice.
• Potential for Future Changes: With varying opinions and likely appeals in related cases, it's possible that the noncompete rule will eventually be reviewed by the Supreme Court. However, this will take time, and no immediate resolution is expected.
• Consider Alternatives: Given the evolving legal landscape and the growing trend of states banning noncompetes (California, among others), employers might consider shifting towards non-solicitation agreements. These are not covered by the FTC’s rule and can provide some of the protections offered by noncompetes without the legal risks.

For now, employers should sit tight and avoid making any immediate changes to their noncompete policies. However, it's important to stay informed about ongoing legal developments. Employers should also think carefully before attempting to enforce existing noncompetes, as doing so could draw unwanted attention and legal scrutiny.

For more guidance on how this ruling may impact your business, contact Wood Stabell today. We’re here to help you navigate these uncertain times and explore strategies to protect your business interests.

The information provided in this article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by virtue of this article. For specific legal advice related to your situation, please consult with a qualified attorney.