By: Dylan Wiseman
On 23 April 2024 the Federal Trade Commission (FTC) issued its final rule effectively banning workplace non-compete agreements. The rule applies retroactively and operates as a sweeping ban on workplace contract provisions that prevent a former employee from working for a competitor after leaving employment. This new rule is one of the centrepiece items of President Biden’s economic agenda. It becomes effective 120 days after its formal publication and has been subject to a legal challenge by several plaintiffs in the US Eastern District of Texas district court.
As a result of this rule, US employers may need to pivot away from non-compete agreements and transition toward practices that focus on protecting intellectual property rather than restricting employee mobility. Because the rule bans non-compete agreements, trade secrets are now the key route for employers to restrict post-termination competition.
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This article was first published on IAM in May 2024; for further in-depth analysis, please visit the IAM Trade Secrets Hub