{"id":4746,"date":"2024-04-24T12:31:22","date_gmt":"2024-04-24T17:31:22","guid":{"rendered":"https:\/\/niada.com\/dashboard\/?p=4746"},"modified":"2024-04-24T13:08:23","modified_gmt":"2024-04-24T18:08:23","slug":"ftc-bans-noncompetes-agreements","status":"publish","type":"post","link":"https:\/\/niada.com\/dashboard\/ftc-bans-noncompetes-agreements\/","title":{"rendered":"FTC bans noncompetes agreements"},"content":{"rendered":"\n

The Federal Trade Commission issued its final rule banning the enforcement of noncompete agreements<\/a>, which NIADA and several other associations opposed.<\/p>\n\n\n\n

The ban will become effective in 120 days and will bar the noncompetes for future employees. Existing noncompetes for senior executives can only be enforced for employees earning more than $151,164 and in \u201cpolicy-making\u201d positions.<\/p>\n\n\n\n

The FTC proposed the rule in January 2023 and received more than 26,000 comments.<\/p>\n\n\n\n

The U.S. Chamber of Commerce in February 2023 sent a letter to U.S. congressmen in opposition to the proposed rule. NIADA signed onto the letter, joining dozens of other federal, regional and state associations, in opposition.<\/p>\n\n\n\n

The letter questioned the FTC\u2019s<\/a> authority to issue the ban and raised concern about the impact to the industry.<\/p>\n\n\n\n

 \u201cIn February 2023, NIADA, along with over 100 other trade associations and the U.S. Chamber of Commerce, sent a letter to the U.S. Congress detailing our opposition to the, at that time, proposed rule from the FTC invalidating non-competes,\u201d said Jeremy Beck, NIADA Vice President of Dealer Development. \u201cAs we stated in that letter, we believe the FTC lacks constitutional or statutory authority to issue such a rule. We are disappointed that the FTC has issued their final rule, the non-compete clause rule, effectively invalidating most noncompetes currently in place and prohibiting the use of them in the future. We continue to advocate for our members by opposing this rule and encourage members of the U.S. Congress to assert their constitutional authority.\u201d<\/p>\n\n\n\n

The ban does not eliminate trade secret regulations and non-disclosure agreements.<\/p>\n\n\n\n

To comply, dealers must do the following:<\/p>\n\n\n\n

Come into compliance with the rule during the 120-day compliance period starting on the day after the rule is listed in the Federal Register. <\/p>\n\n\n\n

Cease issuing noncompetes as a term or condition of employment for any employees.<\/p>\n\n\n\n

Current employees whereby a noncompete is in place are immediately invalid, with one exception relating to \u201csenior executives.\u201d <\/p>\n\n\n\n

Notify, in writing, employees and former employees that are under a noncompete, excluding defined \u201csenior executives\u201d that their non-competes will not be enforced.<\/p>\n\n\n\n

\u201cSenior executives\u201d are excluded from non-competes already in place.  \u201cSenior executive\u201d is defined as a worker making more than $151,164 in total compensation (salary, commission and nondiscretionary bonuses) who is in a \u201cpolicy-making position.\u201d  \u201cPolicy-making position\u201d is defined as a business entity\u2019s president, chief executive officer, or equivalent, or any other officer of a business who has policy-making authority.<\/p>\n\n\n\n

Notably, under the rule, while existing noncompetes for senior executives can still be enforced, it prohibits all noncompetes for all employees moving forward.<\/p>\n\n\n\n