The Federal Trade Commission (FTC) announced on April 23, 2024, that non-compete agreements will be banned across the U.S. for most workers. This new rule will start in August 2024, 120 days after the FTC announced it. This is a major change for Virginia employers who have used these agreements to keep their business information safe and stay ahead of their competition.
Understanding the new rules on non-compete agreements
The FTC’s new rule says that employers cannot use non-compete agreements anymore in the U.S., except for high-level executives. The FTC describes these executives as those in “policy-making position[s]” earning over $151,164 per year.
The ban on non-compete agreements aims to increase worker freedom. It also hopes to encourage new ideas, and help people start their own businesses without being held back by previous employers.
Before, Virginia’s non-compete agreements had to be carefully made to genuinely protect business interests like trade secrets or customer relationships. They also had to be reasonable in how long and broad they were. But with the new rules, these conditions won’t matter anymore because the agreements won’t be enforceable for most U.S. workers.
What employers need to do next
Employers should get ready for these changes by looking at other ways to protect their business interests without non-compete agreements. This might mean using stronger non-disclosure agreements (NDAs) or improving training programs to keep important information safe.
Employers also need to think about how this change might create more competition and what it means for keeping talented employees and protecting their intellectual property.