The FTC Non-Compete Rule on the Ropes But Still Standing with September 4 Deadline Approaching: What to Do?
We continue to monitor the legal challenges to the FTC’s ban on non-compete agreements. That rule is scheduled to go into effect on September 4, and employers are required to issue rescission notices by that date.
At this time, at least two courts, one in Texas and another in Florida, have found the rule to overstep the FTC’s authority. A court in Pennsylvania, however, upheld the rule. To date, no court has issued a nationwide injunction. It is still possible that the rule will be invalidated nationwide. If that occurs, it appears it will happen within days of the rule’s current effective date.
If no court has enjoined the rule nationwide by its effective date on September 4th, employers will have to decide what to do. The options range from (1) complying with the rule by issuing rescission notices by September 4, even though it may ultimately be struck down, (2) issuing some type of “conditional” notice that tries to claw back a non-compete agreement if the rule is invalidated, (3) continuing to wait beyond the September 4 effective date at the risk of penalties imposed by the FTC.
There are pros and cons to all of these approaches. The best one for your company may not be the best for all. Members of our Labor Employment Group are available to discuss these options with you.
Written By: Trip Umbach
If you have any questions or need legal support, please contact:
Trip Umbach 205-868-6072 or tumbach@starneslaw.com
Alfred Perkins 205- 868-6024 or aperkins@starneslaw.com
Breanna Young 205- 868-6020 or byoung@starneslaw.com
Grace Ann Azar 205-868-1760 or gazar@starneslaw.com
Averie Jones 205-868-6043 or ajones@starneslaw.com
Scott Stevens 251-405-5067 or sstevens@starneslaw.com
Weathers Bolt 251-445-4718 or wbolt@starneslaw.com
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