NJ Labor And Employment Law

The New Jersey Labor and Employment Law Blog is authored by Jay S. Becker and Joseph C. DeBlasio, shareholders in the Labor and Employment Law Practice Group, with support from the associates in the Group. It is dedicated to provide news and updates regarding all labor and employment matters throughout New Jersey.

Non-Compete Ban Update

August 19, 2024 | Comments Off on Non-Compete Ban Update
Posted by Ari Burd

As you may recall from our prior alert in April entitled Federal Trade Commission Attempts to Ban Non-Compete Agreement, the Federal Trade Commission (“FTC”) previously issued a rule, set to go into effect on September 4, 2024, effectively banning non-compete (with some limited exceptions related to senior executives earning in excess of $150,000 and agreements entered into as part of a sale of a business). While the consensus amongst legal experts remains that the ban has little hope of ultimately being upheld by the Supreme Court, the fact remains that two lower courts have failed to issue nationwide stays on the rule and the last Court set to decide whether to enjoin the rule is expected to rule on August 30th. If the law does go into effect (even temporarily), it requires any businesses that have non-competes with employees or former employees to send notices to those employees. So for most businesses, we recommend the following:

  1. Immediately identify any employees or former employees who are subject to non-compete agreements.
  2. Begin considering your options in the event the rule is allowed to go into effect. Specifically, consider non-solicitation agreements (which remain valid) or offering garden leave (paying someone not to compete) to those rare, indispensable employees who, if allowed to compete, could cause massive damage to your business.
  3. If a nationwide injunction is not issued by August 30th, be prepared to issue a notice in accordance with the FTC rule during the week of September 4th. Our office can assist you with preparing these notices.

Should you have any questions or comments regarding this important development, please feel free to contact Ari Burd, Jeri Abrams or Jay Becker from the GH&C Labor and Employment Law group.

Category: Non-compete agreements
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