In an administrative decision that may have lasting impacts for business owners throughout the United States, the FTC issued its final noncompete clause rule on April 23. The final rule adopts a comprehensive ban on new noncompetes with all workers after the effective date—120 days after the date of publication in the federal register. According to the FTC, noncompete agreements inhibit fair competition and, therefore, violate Section 5 of the FTC Act.

The final rule contains separate provisions defining unfair methods of competition for the two subcategories of workers. Specifically, the final rule provides that, with respect to a worker other than a senior executive, it is an unfair method of competition for a person to enter into or attempt to enter into a noncompete clause; to enforce or attempt to enforce a noncompete clause; or to represent that the worker is subject to a noncompete clause.