The FTC’s Nationwide Ban on Non-Compete Agreements How Will This Affect New Car Dealers? On April 23, 2024, the Federal Trade Commission (FTC) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, who are earning greater than $151,164 annually and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register. The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court, arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule. Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/ shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership BY JUDE C. BURSAVICH, PARTNER, BREAZEALE, SACHSE & WILSON LLP 8
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