FTC’s Final Rule on Non-competes: What You Need to Know
May 1, 2024
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Legal experts Patrick O'Brien and Grace Lee discuss the FTC's final rule on non-competes, its impact on medical spas, and the potential challenges and changes for employers, including the ban on non-competes for most workers except senior executives. They delve into the implications for medical directors, training investments, and how businesses should navigate the evolving landscape of non-compete agreements.
The FTC's final rule on non-compete clauses prohibits restrictions on worker mobility, impacting medical directors and training investments.
The rule applies broadly to all workers with exceptions for senior executives, creating a complex landscape for businesses to navigate.
Deep dives
FTC's Ban on Non-Compete Clauses Impacts Various Industries
The recent announcement by the FTC banning non-compete clauses in employment contracts has significant implications across industries, particularly in high-skill sectors like healthcare and medical spas. This rule prohibits the use of non-competes that restrict workers from seeking new employment or starting their own businesses after leaving their current positions. Businesses are now mandated to inform current and past employees about the inapplicability of non-competes, with specific exceptions for executive employees. The rule aims to protect worker mobility while acknowledging concerns about protecting businesses' investments in employee training.
Implications for Various Worker Categories and Exceptions
The final rule on non-compete clauses applies broadly to all workers, including paid, unpaid, independent contractors, interns, and externs, with limited exceptions for senior executives based on salary and authority criteria. These exceptions primarily apply to existing non-competes and not new agreements. The rule's scope and provisions are subject to ongoing legal challenges and the timing of its implementation, offering insights into worker protections and business interests. The detailed definitions and exceptions create a complex landscape for affected workers and employers to navigate.
Future Uncertainty Surrounding Non-Compete Rules and Business Strategies
As the controversy surrounding the FTC's non-compete ban continues, uncertainties persist regarding the rule's enforcement and potential impacts on businesses and workers. Legal challenges and debates over the rule's jurisdiction and breadth have led to a wait-and-see approach for businesses adjusting their practices. Questions arise regarding the protection of investments in employee training, the application of non-solicitation agreements, and the interplay between non-compete rules and other contractual provisions. The evolving landscape underscores the need for businesses to stay informed on legal developments and adapt their strategies in response to changing regulatory environments.
This week, AmSpa CEO, Alex R. Thiersch, JD, speaks with Patrick O’Brien, JD, of AmSpa and Grace Lee, JD, of ByrdAdatto. The attorneys discuss the contents of the Federal Trade Commission’s (FTC) final ruling on the Non-Compete Clause Rule, describing its potential impact on medical spas, the lawsuits challenging the rule and when it may go into effect. Their conversation includes:
What non-competes are and what the new FTC rule would prohibit;
Which workers are subject and the exception for senior executives;
Whether this may impact medical directors and training investments;
What changes you should or should not make as an employer; and
The expected outlook of this rule.
To read their analyses about the FTC’s final rule against non-compete agreements, please view Lee’s article at ByrdAdatto, and O’Brien’s article on the AmSpa Now! Blog.
Music by Ghost Score.
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