In April of 2024, the Federal Trade Commission (“FTC”) announced that the FTC rule banning non-competition agreements for workers is going into effect on September 4, 2024. The rule seeks to forestall companies from entering into non-competition agreements with workers in the interest of making sure that competition for work is not unfair to employees. The rule will have retroactive effect for non-senior executives. Companies are required to provide notice to those employees that the non-competition agreements will not be enforced. Existing non-competition agreements with senior executives will remain in effect, but the ban prevents entering into these agreements with senior executives after September 4, 2024. The rule will supersede/preempt state laws only where a state law conflicts with the federal law. However, state laws that provide more rights to employees will not be preempted. As for Massachusetts, which has the Massachusetts Non-Competition Agreement Act (“MNAA”), the federal law preempts the MNAA, for the most part, because the FTC rule provides greater rights to employees.

Though the FTC rule is set to take effect in September, there have been many challenges to the rule across the federal circuits. As such the future of the rule is currently undetermined.

For more information you can reach out to Tanzi Cannon at General Counsel by Cannon, PLLC. Or go to www.GCbyCannon.com.

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