On April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 in favor of banning noncompete clauses. The FTC first proposed the Noncompete Clause Rule on Jan. 19, 2023, under sections 5 and 6(g) of the FTC Act. GT previously covered the FTC’s request for comments.
The enforceability of restrictive covenants, particularly non-compete agreements, can be very difficult for employers to navigate, especially for companies in their “start-up” phase. Technology companies in particular face challenges in structuring non-competes that balance their need to attract talent with their need to protect confidential and sensitive information, while preventing unfair competition by former employees.