Looming Federal Ban on Non-Compete Agreements

Looming Federal Ban on Non-Compete Agreements – What You Need to Know

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The Federal Trade Commission has issued a proposed rule that will ban most noncompete agreements going forward. Employees who own at least 25% of a firm that is being acquired would be exempt, and virtually all existing non-compete agreements would be rescinded immediately. If the rule goes into effect as proposed it could significantly impact business decisions related to M&A as well as firm owners and employees currently working under such agreements. ACEC is offering a special webinar to help you understand what the proposed rule means to your firm and steps you can take to protect proprietary information.

Noncompete agreements are often included in ownership or shareholder agreements to prevent someone from taking employees, proprietary information, and clients with them if they leave the firm. They are also routinely used in acquisitions of other firms. The FTC argues that such agreements suppress wages and prevent entrepreneurs from starting new businesses. Several states have already banned or restricted the use of noncompete agreements. If the FTC publishes a final rule, it is expected to be swiftly challenged in court.

After attending this session, participants will:

Understand what is in the FTC proposed rule
Learn about other restrictive covenants, such as non-solicit and non-disclosure agreements, that the FTC might consider the equivalent of a non-compete
Understand the rule making process and why a final rule is vulnerable to legal challenge
Discuss approaches to protecting proprietary information and clients if the ban on noncompete agreements is enacted and upheld in court

Presenters: Andrew Kilberg and Jason Schwartz, Gibson Dunn