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The FTC's Nationwide Ban on Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, earning greater than $151,164 annually, and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register.

The FTC issued its earlier proposed rule on January 5, 2023, prohibiting employers from using non-compete agreements with workers. The proposed rule also invalidated all existing non-compete agreements no later than the rule’s compliance date. The earlier proposed rule also significantly affected non-compete agreements in the sale of a business. The proposed rule banned any non-compete provisions in the sale of a business unless each selling party owned at least a 25% interest in the business entity being sold. Under the final rule recently issued, however, the proposed ban affecting non-compete agreements regarding the sale of a business was removed.

The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule.

Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership relationship regardless of dissolution, and the limited liability/member relationship. Six of Louisiana’s exceptions to the general prohibition on non-compete agreements (unrelated to employees) remain unaffected by the FTC’s final rule.

Moreover, Louisiana law specifically allows a non-solicitation of customers agreement between employers and employees. Such a provision allows an ex-employee to continue working in the industry, but prohibits the ex-employee from soliciting customers of their former employer. This provision also appears unaffected by the FTC’s final rule. Confidentiality provisions prohibiting employees from disclosing an employer’s confidential information also remain intact after the final rule.

The final rule may never become law. Significant legal challenges to the rule will continue. If the final rule does become law, much of the Louisiana non-compete law remains viable. Louisiana businesses should continue taking advantage of the law as it exists today, until the viability of the FTC’s final rule is judicially determined, which may take years.

The FTC's Nationwide Ban on Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, earning greater than $151,164 annually, and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register.

The FTC issued its earlier proposed rule on January 5, 2023, prohibiting employers from using non-compete agreements with workers. The proposed rule also invalidated all existing non-compete agreements no later than the rule’s compliance date. The earlier proposed rule also significantly affected non-compete agreements in the sale of a business. The proposed rule banned any non-compete provisions in the sale of a business unless each selling party owned at least a 25% interest in the business entity being sold. Under the final rule recently issued, however, the proposed ban affecting non-compete agreements regarding the sale of a business was removed.

The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule.

Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership relationship regardless of dissolution, and the limited liability/member relationship. Six of Louisiana’s exceptions to the general prohibition on non-compete agreements (unrelated to employees) remain unaffected by the FTC’s final rule.

Moreover, Louisiana law specifically allows a non-solicitation of customers agreement between employers and employees. Such a provision allows an ex-employee to continue working in the industry, but prohibits the ex-employee from soliciting customers of their former employer. This provision also appears unaffected by the FTC’s final rule. Confidentiality provisions prohibiting employees from disclosing an employer’s confidential information also remain intact after the final rule.

The final rule may never become law. Significant legal challenges to the rule will continue. If the final rule does become law, much of the Louisiana non-compete law remains viable. Louisiana businesses should continue taking advantage of the law as it exists today, until the viability of the FTC’s final rule is judicially determined, which may take years.

The FTC's Nationwide Ban on Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, earning greater than $151,164 annually, and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register.

The FTC issued its earlier proposed rule on January 5, 2023, prohibiting employers from using non-compete agreements with workers. The proposed rule also invalidated all existing non-compete agreements no later than the rule’s compliance date. The earlier proposed rule also significantly affected non-compete agreements in the sale of a business. The proposed rule banned any non-compete provisions in the sale of a business unless each selling party owned at least a 25% interest in the business entity being sold. Under the final rule recently issued, however, the proposed ban affecting non-compete agreements regarding the sale of a business was removed.

The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule.

Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership relationship regardless of dissolution, and the limited liability/member relationship. Six of Louisiana’s exceptions to the general prohibition on non-compete agreements (unrelated to employees) remain unaffected by the FTC’s final rule.

Moreover, Louisiana law specifically allows a non-solicitation of customers agreement between employers and employees. Such a provision allows an ex-employee to continue working in the industry, but prohibits the ex-employee from soliciting customers of their former employer. This provision also appears unaffected by the FTC’s final rule. Confidentiality provisions prohibiting employees from disclosing an employer’s confidential information also remain intact after the final rule.

The final rule may never become law. Significant legal challenges to the rule will continue. If the final rule does become law, much of the Louisiana non-compete law remains viable. Louisiana businesses should continue taking advantage of the law as it exists today, until the viability of the FTC’s final rule is judicially determined, which may take years.

The FTC's Nationwide Ban on Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, earning greater than $151,164 annually, and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register.

The FTC issued its earlier proposed rule on January 5, 2023, prohibiting employers from using non-compete agreements with workers. The proposed rule also invalidated all existing non-compete agreements no later than the rule’s compliance date. The earlier proposed rule also significantly affected non-compete agreements in the sale of a business. The proposed rule banned any non-compete provisions in the sale of a business unless each selling party owned at least a 25% interest in the business entity being sold. Under the final rule recently issued, however, the proposed ban affecting non-compete agreements regarding the sale of a business was removed.

The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule.

Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership relationship regardless of dissolution, and the limited liability/member relationship. Six of Louisiana’s exceptions to the general prohibition on non-compete agreements (unrelated to employees) remain unaffected by the FTC’s final rule.

Moreover, Louisiana law specifically allows a non-solicitation of customers agreement between employers and employees. Such a provision allows an ex-employee to continue working in the industry, but prohibits the ex-employee from soliciting customers of their former employer. This provision also appears unaffected by the FTC’s final rule. Confidentiality provisions prohibiting employees from disclosing an employer’s confidential information also remain intact after the final rule.

The final rule may never become law. Significant legal challenges to the rule will continue. If the final rule does become law, much of the Louisiana non-compete law remains viable. Louisiana businesses should continue taking advantage of the law as it exists today, until the viability of the FTC’s final rule is judicially determined, which may take years.

The FTC's Nationwide Ban on Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, earning greater than $151,164 annually, and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register.

The FTC issued its earlier proposed rule on January 5, 2023, prohibiting employers from using non-compete agreements with workers. The proposed rule also invalidated all existing non-compete agreements no later than the rule’s compliance date. The earlier proposed rule also significantly affected non-compete agreements in the sale of a business. The proposed rule banned any non-compete provisions in the sale of a business unless each selling party owned at least a 25% interest in the business entity being sold. Under the final rule recently issued, however, the proposed ban affecting non-compete agreements regarding the sale of a business was removed.

The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule.

Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership relationship regardless of dissolution, and the limited liability/member relationship. Six of Louisiana’s exceptions to the general prohibition on non-compete agreements (unrelated to employees) remain unaffected by the FTC’s final rule.

Moreover, Louisiana law specifically allows a non-solicitation of customers agreement between employers and employees. Such a provision allows an ex-employee to continue working in the industry, but prohibits the ex-employee from soliciting customers of their former employer. This provision also appears unaffected by the FTC’s final rule. Confidentiality provisions prohibiting employees from disclosing an employer’s confidential information also remain intact after the final rule.

The final rule may never become law. Significant legal challenges to the rule will continue. If the final rule does become law, much of the Louisiana non-compete law remains viable. Louisiana businesses should continue taking advantage of the law as it exists today, until the viability of the FTC’s final rule is judicially determined, which may take years.

The FTC's Nationwide Ban on Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, earning greater than $151,164 annually, and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register.

The FTC issued its earlier proposed rule on January 5, 2023, prohibiting employers from using non-compete agreements with workers. The proposed rule also invalidated all existing non-compete agreements no later than the rule’s compliance date. The earlier proposed rule also significantly affected non-compete agreements in the sale of a business. The proposed rule banned any non-compete provisions in the sale of a business unless each selling party owned at least a 25% interest in the business entity being sold. Under the final rule recently issued, however, the proposed ban affecting non-compete agreements regarding the sale of a business was removed.

The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule.

Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership relationship regardless of dissolution, and the limited liability/member relationship. Six of Louisiana’s exceptions to the general prohibition on non-compete agreements (unrelated to employees) remain unaffected by the FTC’s final rule.

Moreover, Louisiana law specifically allows a non-solicitation of customers agreement between employers and employees. Such a provision allows an ex-employee to continue working in the industry, but prohibits the ex-employee from soliciting customers of their former employer. This provision also appears unaffected by the FTC’s final rule. Confidentiality provisions prohibiting employees from disclosing an employer’s confidential information also remain intact after the final rule.

The final rule may never become law. Significant legal challenges to the rule will continue. If the final rule does become law, much of the Louisiana non-compete law remains viable. Louisiana businesses should continue taking advantage of the law as it exists today, until the viability of the FTC’s final rule is judicially determined, which may take years.