Viewing the FTC’s noncompete rule from a New Hampshire perspective

The Federal Trade Commission (FTC) recently announced a final rule banning most noncompete agreements. If the rule isn’t stopped by the courts, it will go into effect 120 days after it is officially published.

What do New Hampshire businesses need to know about the final rule?

Although it’s called a final rule, the situation is by no means final. There are serious challenges to the rule underway and ahead. One or more of these court actions may enjoin (stop) the rule from taking effect temporarily or permanently. The lawsuits allege the FTC doesn’t have the authority to enact a rule banning noncompetes.

The argument is that noncompetes present questions of major political or economic significance that are under the jurisdiction of Congress, not governmental agencies. It will take time for these challenges to work their way through the courts, and we will continue to monitor them closely.

If the rule does go into effect, how will it affect your business?

The rule will apply to for-profit businesses of all sizes. It will prohibit them from entering into or using noncompete agreements with most workers after it goes into effect, which—if it isn’t stopped by the courts—will be in September 2024. It will apply to contracts entered into before or after that effective date, except in the case of certain high-level executives (defined below) whose contracts entered into before the effective date are exempted.