FTC Update on Non-Compete Agreements: What You Need to Know

The Federal Trade Commission (FTC) recently announced a significant rule change effective later this summer, aiming to restrict the use of non-compete agreements. Despite expected legal challenges, such as those from the U.S. Chamber of Commerce, which might delay its implementation, it’s crucial for businesses to start preparing now.

What Does the FTC’s Final Rule Mean for Your Business?

You cannot enter into non-compete clauses with workers.

  1. Existing non-compete agreements will no longer be enforceable, except for certain senior executives.
  2. You must notify both current and former employees that their non-compete agreements are no longer enforceable.

How to Prepare Your Business for These Changes with Employer Flexible’s HR Services:

  1. Develop a Personalized Strategy Plan: Employ our HR consulting services to help you strategize effectively for your business. Assess the impact of the rule based on your business size, number of employees under non-compete clauses, and the significance of these agreements to your operations.
  2. Use the Next Few Months to Prepare: We recommend utilizing a PEO to take proactive steps to review all existing restrictive covenant agreements. This not only ensures compliance but also identifies key agreements and classifications under the new rule.
  3. Begin Plotting Alternatives: Leverage our legal expertise available through our comprehensive HR services to explore less restrictive covenants like customer non-solicitation or confidentiality agreements that could safeguard your business interests with lower risk.
  4. Don’t Ignore Other Restrictive Covenants: Review other types of agreements such as non-solicitation or non-disclosure agreements. These should also be assessed to ensure they are compliant and relevant under the new regulations.
  5. Get Your Trade Secrets House in Order: Partner with us to enhance protection around your trade secrets. Our HR services include implementing strict policies and procedures to safeguard these valuable assets, limiting access to key personnel, and employing robust security measures.

Stay Informed and Prepared: We at Employer Flexible will continue to monitor the developments around this FTC rule and provide updates as they become available. For any concerns or guidance on how to navigate these changes, feel free to reach out for our professional PEO services.

Prepare your business now to adapt smoothly to these regulatory changes, ensuring compliance and continuing to protect your interests effectively with the support of Employer Flexible.