There are a few exceptions. The ban will not apply to sales of a bona fide business or its assets. The Final Rule has limited application to “senior executives”. For those employees, it is considered an unfair trade practice to enter into or attempt to enter into a non-compete clause, or to enforce or attempt to enforce a non-compete entered into after the effective date, leaving employers free to enforce non-compete clauses entered into with senior executives prior to the effective date. The Federal Trade Commission Act, which provides the authority for the Final Rule, also does not apply to the following industries: banking, savings and loan institutions, federal credit unions, common carriers, air carriers and foreign air carriers and certain persons subject to the Packers and Stockyards Act. It also does not apply to franchisors and franchisees (although it does apply to their employees).
Employers should prepare for the effective date, although legal challenges are inevitable. This requires employers to identify which employees are subject to non-compete clauses and to determine whether they are required to rescind those provisions. Employers should consider whether they have appropriate measures in place to protect customers and confidential information.
Employees should review their own employment agreements to determine what post-employment restrictions are in place and ensure compliance.
The attorneys at Antheil Maslow & MacMinn are available to assist with navigating this new Final Rule and will continue to provide updates as they become available. To learn more about employment law services at AMM Law, visit ammlaw.com/employment.
