FTC Finalizes Noncompete Rule

 – May 28, 2024
FTC Finalizes Noncompete Rule

In April, the Federal Trade Commission (FTC) issued a final rule to promote competition by banning noncompetes nationwide.

The U.S. Chamber of Commerce is suing the FTC, stating that the FTC is acting outside its constitutional and statutory authority and instead is undermining well-established state laws that have long governed the use of noncompete agreements. 

“Since its inception over 100 years ago, the FTC has never been granted the constitutional and statutory authority to write its own competition rules. Noncompete agreements are either upheld or dismissed under well-established state laws governing their use," said Suzanne P. Clark, president and CEO of the U.S. Chamber of Commerce. “This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy."

Here in New Jersey, the NJCPA is actively opposing proposed legislation that would place a de facto ban on restrictive covenants for employment contracts. We are part of a statewide coalition that was able to stop such legislation from passing last year. Sponsors of that bill are expected to renew their push this year, and we will continue our efforts to oppose it.