On April 23, the U.S. Federal Trade Commission voted 3-2 to approve an almost total ban on non-compete clauses in employment agreements.
The final rule (fact sheet) applies nationwide and would force public and private companies to stop enforcing current non-compete clauses, except for those apply to a narrow group of "senior executives." The final rule defines "senior executives" to include those employees earning more than $151,164 a year who are in a "policy-making positions." Non-compete clauses would still be permitted in agreements involving the sale of a business. The rule does not apply to employees outside the United States.
The proposed FTC rule generated more than 26,000 public comments. The Society submitted a comment letter in April 2023 expressing concern about the impact on executive compensation agreements and the ability of companies to retain high-level talent and protect their investments in employee training.
Several business groups, including the U.S. Chamber of Commerce, have announced that they plan to sue to challenge the final rule, which is slated to take effect within 120 days of publication in the Federal Register.