What are Noncompetes?

Noncompetes are contractual agreements that restrict employees from working in a competing business or starting a similar business for a certain period after leaving a job. These clauses are intended to protect a company’s intellectual property and investments in employee training, but they tend to be exploitative, often keeping workers in a job they want to leave or forcing to change their field or locations.

Under the FTC’s updated regulation, noncompete agreements for most employees will cease to be enforceable after the rule becomes effective. However, existing noncompetes for some senior executives, who constitute less than 0.75% of the workforce, will continue to be valid.

It prohibits the creation or enforcement of new noncompetes, and employers must inform workers that their current noncompete agreements will no longer be enforced.