Culhane’s Atlanta partner, Harvey Linder recently authored an article about how the new FTC ban will impact employees and actions that should be taken, which has been published by Law360.
Here are a few excerpts from Harvey’s article:
Background
On April 23, the FTC issued a final rule banning noncompete clauses nationwide.[1] The FTC contends that this protects the fundamental freedom of workers to change jobs, increases innovation and fosters new business formation. An estimated 30 million U.S. workers are subject to some form of noncompete.
The FTC says that noncompetes provide companies with contractual conditions that prevent workers from taking a new job or starting a new business. But that statement alone is incomplete and therefore misleading.
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Impact on Employers
Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. Existing noncompetes for senior executives — who represent fewer than 0.75% of [workers] — will be grandfathered in and can remain in force under the FTC’s final rule.
Senior executives are defined as workers earning more than $151,164 annually and who are in policymaking positions. Employers, however, are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives.
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Conclusion
It hasn’t been determined if the FTC’s final rule will stand up to the court challenges it faces, but employers need to be prepared to deal with its implementation and protect against the potential loss of key employees.
To read the entire article, click HERE
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