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Under the Noncompete Rule, the FTC adopted a comprehensive ban on new noncompetes with all workers, including senior executives. The final Noncompete Rule provides that it is an unfair method of competition—and therefore a violation of Section 5—for employers to enter into noncompetes with workers.
This creates several avenues for fighting a noncompete in court. Contract-Based Challenges to a Noncompete. Ultimately, a noncompete agreement is still a contract and must satisfy all the elements of such. Challenges to the Alleged Interest Protected by a Noncompete. Challenges to the Scope of a Noncompete.
The ban covers all non-competes for U.S. workers (including employees and independent contractors) with limited carve-outs, and is subject to certain exceptions based on the FTC's statutory authority.
For independent contractors, no prohibitions on working for a client's competitor, during or after the contractor is providing services to the client, are legal.
The ban covers all non-competes for U.S. workers (including employees and independent contractors) with limited carve-outs, and is subject to certain exceptions based on the FTC's statutory authority.
(a) Any covenant not to compete contained in a contract or agreement is void and unenforceable.
Subd. (a) Any covenant not to compete contained in a contract or agreement is void and unenforceable.
Noncompetes banned: Noncompete and restrictive-franchise provisions in nearly all employee agreements are banned. (both already in effect). The 2024 legislative session went further and banned restrictive employment covenants in service contracts. All of these provisions are already in effect.
Add information about the parties involved. Describe the terms of the Non-Compete Agreement, such as the length and area of the restriction. If necessary, you can include a non-solicitation clause. Add a confidentiality clause.
∎ The Rule applies to noncompetes with all workers, whether full-time or part-time, including employees, independent contractors, interns, externs, volunteers, apprentices, and others—but there are different requirements for senior executives as defined by the Rule (see Questions 5-6).