so it is difficult to state with certainty when the Rule will become effective. However, businesses are urged to evaluate how they will protect company interests in lieu of using non-compete clauses or agreements. Businesses should not wait or necessarily rely on the pending legal challenges to undertake their own due diligence to ensure the lawfulness of their agreements and covenants in place and to protect the proprietary nature of confidential information, trade secrets and intellectual property.2 Companies should review any existing agreements that contain restrictive clauses or provisions and plan for the effective date of the Rule. This might include determining how to protect proprietary information and preparing to comply by changing existing agreements or clauses and by notifying workers who are subject to noncompetition agreements that will be unlawful once the Rule becomes effective. 1. Within 24 hours of the FTC’s adoption of its ban on Apr. 23, 2024, the U.S. Chamber of Commerce and other pro-business groups filed suits in federal court asserting the FTC lacks authority to issue and enforce its blanket noncompete ban as an “unfair method of competition”, citing the absence of a clear mandate from the U.S. Congress. Enforcement of the rule could be delayed well beyond the 120 days, particularly if the cases are appealed down the road. (See Chamber of Commerce et al. v. FTC et al., No. 6:24-cv-148; see also Ryan, LLC v. FTC, No. 3:24cv-986). 2. Certain federal agencies operating under a different set of federal laws have been recently challenging nondisclosure, non-solicitation and confidentiality covenants and agreements as unlawful, separate and apart from the FTC and the new Rule. Julie A. Cardosi is Principal of the private firm, Law Office of Julie A. Cardosi, P.C., of Springfield, Illinois. She has practiced law for 38 years and represents the business interests of franchised motor vehicle dealers throughout Illinois. Formerly in-house legal counsel for the Illinois Automobile Dealers Association, she concentrates her private practice in the areas of dealership operations and compliance matters, transfers of ownership, mergers and acquisitions, franchise law, commercial real estate transfers, dealership employment and other areas impacting day-to-day dealership operations. She has also served as former Illinois Assistant Attorney General and Deputy Chief of the Consumer Fraud Bureau of the Attorney General’s Office. The material discussed in this article is for general information only and is not intended as legal advice and should not be acted upon as such. Dealers should consult their own private legal counsel for application to their specific circumstances. For more information, Julie can be reached at jcardosi@autocounsel.com, or at 217-787-9782, ext. 1. 11 Illinois Automobile Dealer News
RkJQdWJsaXNoZXIy MTg3NDExNQ==