A new Federal Trade Commission rule that seeks to ban nearly all noncompete clauses in employment contracts is part of a longer-running national trend of skepticism toward such agreements, McGuireWoods Tysons partner John E. Thomas Jr. told Virginia Business in an Aug. 13, 2024, story.
On April 23, 2024, the FTC issued a final rule banning nearly all noncompetes nationwide, but legal challenges call into question whether the rule will take effect. Thomas, an employment law attorney, told Virginia Business that the new rule aligns with a trend in which courts, including Virginia’s, may decline to enforce noncompete clauses unless they are narrowly tailored.
“The trend toward unenforceability of noncompetes is not a new phenomenon,” Thomas said, although the disputed FTC rule is “the most bold initiative” yet.
Thomas noted that noncompete clauses appear in a variety of documents. While most associate such clauses with employment contracts, employers also may include noncompetes in equity plan agreements or LLC formation documents, he said.
“We always explore the full gamut of possibilities where these types of clauses exist,” Thomas said.