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Jeffrey M. Beemer, Member, Dickinson Wright PLLC Aleanna B. Siacon, Associate, Dickinson Wright PLLC

FTC Declares Employees Free from Most Noncompetes, But How Far Does the Ban Go and Will It Last?

By Jeffrey M. Beemer
Member, Dickinson Wright PLLC

By Alleanna B. Siacon
Associate, Dickinson Wright PLLC

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Original Publish Date: May 7, 2024

During an Open Commission Meeting on April 23, 2024, the Federal Trade Commission (“FTC”) voted 3-2 in favor of issuing the Noncompete Clause Rule (the “Final Rule”), which, with limited exceptions, makes it unlawful to enter into noncompete agreements with workers[1] on or after the Final Rule’s effective date, which is 120 days after its publication in the Federal Register (“effective date”). The Final Rule is scheduled to be published in the Federal Register on May 7, 2024, so unless a court enjoins the FTC’s enforcement of the Final Rule, its effective date will be September 4, 2024. The FTC determined that noncompetes are an unfair method of competition and, therefore, violate Section 5 of the Federal Trade Commission Act. Here are the highlights of the Final Rule:

Section 910.3 of the Final Rule provides the following exceptions:

Additionally, under § 910.4(a), the Final Rule will not limit or affect the enforcement of State laws applicable to noncompete clauses, including, but not limited to, state antitrust and consumer protection laws, so long as such State laws do not conflict with the Final Rule. Nevertheless, the Final Rule will preempt State laws that conflict with its language.

The Final Rule presents broad implications for employees and employers, but court challenges were inevitable. For instance, the U.S. Chamber of Commerce submitted its strong opposition to the FTC’s proposed rule and, in an April 17, 2023 letter to the FTC, called the “categorical ban” representative of “arbitrary and capricious decision-making.” On April 24, 2024, the U.S. Chamber of Commerce and other business groups filed a lawsuit against the FTC in the U.S. District Court for the Eastern District of Texas in which the plaintiffs seek an order permanently enjoining the FTC from enforcing the Final Rule. At least two more lawsuits have been filed in federal court in Pennsylvania and Texas by businesses challenging the Final Rule.

Dickinson Wright will continue to monitor all developments, including pending litigation, that may affect the implementation of the FTC’s Final Rule. In the meantime, companies should assess how they can protect their trade secrets and confidential information without the ability to enforce noncompete agreements. Dickinson Wright attorneys can assist in determining how the Final Rule and other developments will affect existing and future employment agreements.

[1] The final rule affects employers within the FTC’s jurisdiction and applies to employment agreements with a wide range of paid or unpaid workers, including employees, independent contractors, and interns. Although the FTC does not have jurisdiction over most nonprofit organizations, such as some hospitals and healthcare systems, it does have jurisdiction over nonprofits that actually operate for profit or the profit of their for-profit members, for example, where nonprofit hospitals have relationships with for-profit physician practices.

Jeffrey M. Beemer is a member of the Labor & Employment Practice at Dickinson Wright PLLC in Nashville, TN. For more than 25 years, he has provided proactive advice on litigation avoidance and risk management, including daily counseling for employers on all aspects of employment law. Mr. Beemer can be reached at

An Associate in Dickinson Wright’s Troy, MI. office, Aleanna B. Siacon focuses her practice on commercial litigation and works on a variety of complex business disputes. She can be reached at