FTC Votes to Effectively Ban Noncompete Agreements

On April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 to issue a final rule that effectively bans most noncompete agreements in the United States.  The FTC’s rule is scheduled to go into effect 120 days after it is published in the Federal Register.  It allows for the continuation of noncompete agreements with senior executives, which is a defined term and generally encompasses executives with compensation over approximately $151,000 and who have a policy-making position that they started before the Effective Date. The rule also contains an important sale of business exception.  In particular, in respect to the sale of business exception, the FTC did not include the proposed requirement that the restricted party be “a substantial owner of, or substantial member or substantial partner in, the business entity” to fall under this exception.  The FTC’s rule purports to supersede any inconsistent state law and requires clear written notice to employees regarding the unenforceability of existing noncompete arrangements.  There is much debate regarding the authority for the FTC’s action and it is sure to be challenged in the courts.  The US Chamber of Commerce, a pro-business group, immediately announced that it will bring claims challenging the rule.  “The Chamber will sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked,” announced the Chamber’s President and CEO Suzanne Clark.

This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。

© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.

FTC Votes to Effectively Ban Noncompete Agreements

On April 23, 2024, the Federal Trade Commission (FTC) voted 3-2 to issue a final rule that effectively bans most noncompete agreements in the United States.  The FTC’s rule is scheduled to go into effect 120 days after it is published in the Federal Register.  It allows for the continuation of noncompete agreements with senior executives, which is a defined term and generally encompasses executives with compensation over approximately $151,000 and who have a policy-making position that they started before the Effective Date. The rule also contains an important sale of business exception.  In particular, in respect to the sale of business exception, the FTC did not include the proposed requirement that the restricted party be “a substantial owner of, or substantial member or substantial partner in, the business entity” to fall under this exception.  The FTC’s rule purports to supersede any inconsistent state law and requires clear written notice to employees regarding the unenforceability of existing noncompete arrangements.  There is much debate regarding the authority for the FTC’s action and it is sure to be challenged in the courts.  The US Chamber of Commerce, a pro-business group, immediately announced that it will bring claims challenging the rule.  “The Chamber will sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked,” announced the Chamber’s President and CEO Suzanne Clark.

This article is available in the Jenner & Block Japan Newsletter. / この記事はJenner & Blockニュースレターに掲載されています。

© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.

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