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A specification in a contract between an employer and employee that prevents the employee from working for a competing employer or starting a competing business after the worker's employment ends. The restriction typically applies to a stated time period and geographical area. On April 24, 2024, the Federal Trade Commission (FTC) voted to ban new non-compete agreements with all employees, including senior executives. Existing non-compete agreements with senior executives remain enforceable but all other workers with non-compete agreements are unenforceable. Non-compete agreements have been designed historically to protect company secrets and intellectual property and encourage investment in employee training. The new FTC rule affects workers employed by for-profit businesses; it does not apply to non-profit organizations. The rule goes into effect 120 days following publication in the Federal Register, however, it may be subject to court challenges.
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