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Feds Ban Non-Compete Agreements 

The Federal Trade Commission (FTC) approved its final rule on April 23, 2024, which will ban non-compete clauses in worker contracts. As noted in its fact sheet, the FTC estimates that banning non-compete agreements will help drive innovation with increased competition and will result in the growth of new business formation and higher earnings for workers as they have access to additional work opportunities. 

UPDATE: Note that this FTC ruling is now being challenged in court by the U.S. Chamber of Commerce who may seek an injunction to block the ban temporarily. Stay tuned for more updates! 

FTC to Reveal Its Stance on Non-Compete Agreements 

The Federal Trade Commission (FTC) announced that it will finalize its position on non-compete clauses in employment contracts on April 23, 2024, when it holds a special Open Commission Meeting to vote on the proposed rule to ban the use of non-compete agreements. The Notice of Proposed Rulemaking outlines its concern that non-competes are often harmful to workers by restricting their access to better work opportunities, while the contractual agreements are also unfair to competing businesses.

Noncompete Agreements Under Scrutiny 

At the national, state, and local level, these contractual agreements that limit employees from working for the competition are being scrutinized, restricted, and sometimes prohibited. Employees may no longer be subjected to restrictive non-compete agreements depending on where they work. A national ban is under consideration because of the severe limitations these contracts place on employee mobility and innovation. The extent to which they are limited varies in scope by jurisdiction. Some states have banned them altogether, while a dozen others restrict their enforceability with notice periods, consideration requirements, and wage thresholds for agreement qualifications. Review this article for more information and to verify the state laws in effect.

Florida

Florida Employment-Related Law Signed 

Signed by Governor Ron DeSantis on April 11, 2024, Florida HB 433 will require employers to refer to state and federal agencies to govern several areas of workplace rules. The law is effective July 1, 2024, and preempts local government from passing laws related to: 

• Workplace heat safety protocols beyond what is required by federal law (OSHA) 
• Using purchasing or contracting power to influence wage rates and employee benefits 
• Making rules about workplace scheduling and predictive scheduling for private employers 

Under this new legislation, requirements for these issues must be enacted by state legislature and the Governor. These policies cannot be implemented at the local level of government. More details can be found in this Fisher Phillips article dated 4/22/2024.

Minnesota

Minnesota Staffing Agencies Banned from Blocking Direct Hires

This new omnibus law, SF 3852, was signed by Governor Walz on May 17, 2024, and it includes a ban on most contract provisions that restrict staffing agency customers from directly hiring one of their employees or independent contractors. This portion of the law is effective on July 1, 2024. Agencies and businesses should note that this also applies to existing contracts, and there are notice requirements to inform workers about this change and that any current restrictive clauses are void and unenforceable. Consult with your legal counsel regarding the legality of existing conversion fee agreements. More details are in this Fisher Phillips article.

Texas

Ban on Non-Competes Delayed for Parties in Texas Case 

After the Federal Trade Commission (FTC) issued a final rule to ban non-compete agreements in April 2024, a judge in Texas has now partially banned the use of non-compete clauses for the plaintiff and its intervenors. The Court is expected to make a final rule that could result in a nationwide injunction. Otherwise, the ban on non-compete contract clauses will go into effect for the majority of companies in the U.S. on September 4, 2024. For more insight, refer to this article by Seyfarth Shaw. 

Washington

Washington Updates its Law Limiting Non-competes 

The state's existing law (SB 5935) that limits the use of non-compete agreements is being amended further to favor employees in its provisions, exceptions, and terms for legal action. Companies should evaluate their contracts to ensure compliance with these changes that will be effective June 6, 2024. See local firm Epstein Becker Green's website for more information or this JD Supra article.  

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