How the FTC’s Noncompete Ban Will Affect Bosses and Workers

For decades, noncompete employment agreements have prevented all sorts of workers — doctors, engineers, even hair stylists — from easily switching jobs. That may soon change after the US Federal Trade Commission approved a near-total ban on such provisions. The move was cheered by President Joe Biden but pilloried by business groups like the US Chamber of Commerce, which immediately sued to block the ban. As the legal challenge plays out, employers and employees were trying to make sense of the 570-page rule and gauge its impact.

Existing noncompetes that apply to lower- and mid-level workers would be voided after the rule goes into effect in four months. Employers must provide “clear and conspicuous notice” to such workers that the restriction is no longer in effect. Noncompetes for senior executives in a “policymaking position” who earn more than $151,164 a year can remain, but no new ones can be written. The rule doesn’t apply to banks, credit unions or nonprofits, because they aren’t subject to FTC regulation, but hedge funds, private equity firms and other asset managers would be covered.