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5 Steps to Take NOW to Prep for the Potential Non Compete Ban

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5 Steps to Take NOW to Prep for the Potential Non Compete Ban

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Non compete

August 21, 2024 Update: Today, a federal judge barred the government from putting the non compete ban into effect. The FTC is considering an appeal, but as of today, the ban will not take effect on Sept. 4, 2024. Practices are still encouraged to prepare in case it does take effect in the future.

When the FTC first announced its ban on non compete agreements in April, it was unclear when the ban would take effect. Now that a clear date is in place and the ban will take effect Sept. 4, 2024, it’s a good time to take concrete steps to ensure your practice is ready.

Check out these five tips so you can prepare for the non compete ban now and be ready for the upcoming implementation date.

1. Existing Lawsuits Likely Don’t Apply to You

Some practices have been slow to prepare for the ban on noncompete agreements because they believe the current challenges to the law that are working their way through the courts will stave off the requirement. However, even those lawsuits that have been successful are only applicable to the organization that filed them. In other words, unless you personally won a lawsuit challenging the non compete ban, you are still subject to its rules.

For instance, The Villages, a property firm in Florida, won an injunction to prevent the non-compete ban from applying to its employees. But it doesn’t extend to everyone in Florida — only to employees of The Villages. If you didn’t personally file a suit challenging the non compete ban, then you are likely still subject to it, so now is the time to start preparing.

2. You Must Notify Employees That Their Non Competes Are Invalid

If you have non-compete agreements in place with current or previous employees, you must notify them all and let them know that you won’t enforce it after Sept. 4, 2024. You should also tell them that you won’t ask them to sign a new non compete since they are no longer enforceable.

3. Take Note of Non Compete Exceptions

Not every staff member is subject to the ban on noncompetes. The FTC makes exceptions, allowing you to continue using non compete agreements for senior executives who earn above $151,164 per year who are in policymaking roles. In addition, if a non compete is in place as part of the sale of a business, that can remain in effect even after Sept. 4. If you’re unclear about whether any of your non competes are still valid, speak with an attorney well versed in labor and HR laws.

4. Update Your Employee Documentation

Once Sept. 4 arrives, you can no longer ask employees to sign noncompete agreements, so it’s important to remove that verbiage from all employment contracts. You can certainly ask them to sign confidentiality agreements that protect you against employees revealing trade secrets, but you can no longer prohibit them from working for a competitor.

5. Ask an Attorney to Review Onboarding Materials

Once you adjust all of your employee offer letters, confidentiality agreements and other onboarding materials, have a qualified human resources attorney review everything for compliance. If you have any verbiage in your contracts that could be construed as a non-compete, you could be violating the law. Don’t take that chance — work with a lawyer now to head off future problems.

There’s so much more to know about how the ban on non competes will impact your practice. Let attorney Kelly Holden, JD, walk you through the musts during her online training, Comply With New FTC Employee Non-Compete Ban to Avoid Penalties. Register today!


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