What Does FTC Ban On Noncompete Agreements Mean For Companies' Ability To Protect Trade Secrets?

On April 23, 2024, the Federal Trade Commission (FTC) issued its proposed final rule (the “Rule”) banning the use of future noncompete agreements for all workers, including senior executives, 89 FR 38342. Noncompete agreements have long been a valuable tool in a company’s toolbox to mitigate the risk of a former employee disclosing or using company trade secrets. Although recent lawsuits against the FTC will likely delay the enactment of the Rule, given the number of states that have already adopted some type of restrictions on noncompetes, companies should continue to rely on other measures to protect their confidential and trade secret information.