The recently adopted FTC rule banning non-compete agreements was officially published on Tuesday, May 7th, and will go into effect on September 4th, 2024. The FTC pursed this rule over concerns that most employee non-compete agreements create an unfair environment for competition, and as a result and in violation of Section 5 of the FTC act. Regarding healthcare, the Commission indicated that the “final rule will increase competition and efficiency in healthcare markets, as workers at for-profit healthcare entities will be able to spin off new practices or work for different employers where their productivity is greater.”
There are certain exceptions, for example non-competes for “senior executive” staff members can still be enforced. As stated on OAASC member Dinsmore’s website, Senior Executives are defined as workers earning more than $151,164 in total compensation who are in a “policy-making position.” All other workers at for-profit organizations should be notified that their existing non-compete will be nullified on September 4th.
Some organizations have already filed lawsuits challenging this rule, and those outcomes could change the policies within, so employers should keep a close on eye on the outcomes and the potential impact that could follow.