Federal Trade Commission seeks to ban noncompete agreements

On April 23, 2024, the Federal Trade Commission (FTC) announced its final noncompete clause rule, which prohibits post-employment noncompete agreements between employees and their employers. Many Mississippi employers use noncompete agreements for a variety of reasons, including to protect confidential and proprietary information and to protect the investment in employee training. As the final rule has few exceptions and is set to become effective September 4, 2024, Mississippi employers should closely review it to ensure compliance.

Key provisions

The FTC’s final rule deems noncompete agreements to be “unfair methods of competition” and prohibits employers from entering into, or attempting to enter into, written or oral noncompete agreements with employees, independent contractors, and others. It also prohibits employers from enforcing or attempting to enforce noncompete agreements and even from merely asserting that an employee is subject to a noncompete agreement.

A noncompete agreement is defined broadly as, “A term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from: (i) Seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (ii) Operating a business in the United States after the conclusion of the employment that includes the term or condition.”