Update: FTC Noncompete Ban

As mentioned in an earlier post, the FTC enacted a nationwide ban on noncompete agreements that is scheduled to go into effect on September 4, 2024. A Texas court case may change things. Here's the latest:

Are non-competes still legal in Florida? Yes.

You have likely seen A LOT of buzz around the FTC’s ban on non-competes and the varying courts’ responses to it. As of today (August 16, 2024), non-competes are still legal and enforceable.

If none of the courts hearing the legal challenges to the ban strike it down nationally (i.e., not specifically to the employer in their case only), it will go into effect on September 4, 2024. A ruling is expected from the court in Texas on August 30th, so we will keep a close eye on that.

This means that by September 4, employers should revise any existing non-compete agreements and provide written notice to any employees currently under a non-compete (that do not fall into one of the limited exceptions to the ban).

Some employers are taking a wait-and-see approach and not taking any action until the ban goes into effect.

Others are doing some or all of the following between now and September 4th:

1.     Assess whether your industry is exempt from the ban. These exemptions are very limited and generally include banks, credit unions, carriers and some non-profits.

2.     If it happens to be exempt, do a little dance, because you can avoid all of the stresses surrounding this issue.

3.     If it is not, make a list of all employees and independent contractors who have a non-compete currently in place along with their contact information. This applies to current and former workers who are still in their restricted period.

4.     Assess whether any of those workers fall under the exceptions to the ban.

5.     Draft the language of the notice so it is ready to go out, but we suggest getting legal help with this so that you don’t inadvertently waive other covenants (confidentiality, non-solicitation).

6.     Review your existing agreement and have revisions ready to roll out that would make it compliant with the ban.

What will happen if you do not provide notice and/or you have an employee sign a non-compete after September 4? You will not be able to enforce it. Also, the employee will not be able to sue your business, but they can report your company to the FTC which may result in an enforcement action and most likely monetary penalties.

Stay tuned for more to come on this issue…