Main Text of the FTC's New Rule Banning Restrictive Covenants Quoted Here

Below is the final text of 16 C.F.R. § 910.2, as it will be published by the Federal Trade Commission (FTC) in the Federal Register. Such publication is expected to occur very soon, and the rule takes effect 120 days from that publication, barring any injunctions that will be requested by litigants who will judicially challenge enforcement of this rule.

§ 910.2 Unfair methods of competition.
     (a) Unfair methods of competition—(1) Workers other than senior executives. With respect to a worker other than a senior executive, it is an unfair method of competition for a person:
     (i) To enter into or attempt to enter into a non-compete clause;
     (ii) To enforce or attempt to enforce a non-compete clause; or
     (iii) To represent that the worker is subject to a non-compete clause.
     (2) Senior executives. With respect to a senior executive, it is an unfair method of competition for a person:
     (i) To enter into or attempt to enter into a non-compete clause;
     (ii) To enforce or attempt to enforce a non-compete clause entered into after the effective date; or
     (iii) To represent that the senior executive is subject to a non-compete clause, where the
non-compete clause was entered into after the effective date.
     (b) Notice requirement for existing non-compete clauses—(1) Notice required. For each
existing non-compete clause that it is an unfair method of competition to enforce or attempt to enforce under paragraph (a)(1)(ii) of this section, the person who entered into the non-compete clause with the worker must provide clear and conspicuous notice to the worker by the effective date that the worker’s non-compete clause will not be, and cannot legally be, enforced against the worker.
     (2) Form of notice. The notice to the worker required by paragraph (b)(1) of this section
must:
     (i) Identify the person who entered into the non-compete clause with the worker;
     (ii) Be on paper delivered by hand to the worker, or by mail at the worker’s last known
personal street address, or by email at an email address belonging to the worker, including the
worker’s current work email address or last known personal email address, or by text message at
a mobile telephone number belonging to the worker.
     (3) Exception. If a person that is required to provide notice under paragraph (b)(1) of this
section has no record of a street address, email address, or mobile telephone number, such person is exempt from the notice requirement in paragraph (b)(1) of this section with respect to such worker.
     (4) Model language. For purposes of paragraph (b)(1) of this section, the following
model language constitutes notice to the worker that the worker’s non-compete clause cannot legally be enforced and will not be enforced against the worker.
              Figure 1 to paragraph (b)(4)—Model Language [Boldface added]

     A new rule enforced by the Federal Trade Commission makes it unlawful for us to enforce a non-compete clause. As of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE], [EMPLOYER NAME] will not enforce any non-compete clause against you. This means that as of [DATE EMPLOYER CHOOSES BUT NO LATER THAN EFFECTIVE DATE OF THE FINAL RULE]:

•  You may seek or accept a job with any company or any person - even if they          compete with [EMPLOYER NAME].
• You may run your own business - even if it competes with [EMPLOYER NAME].
• You may compete with [EMPLOYER NAME] following your employment with [EMPLOYER NAME].

The FTC's new rule does not affect any other terms or conditions of your employment. For more information about this rule, visit [link to final rule landing page]. Complete and accurate translations of the notice in certain languages other than English, including Spanish, Chinese, Arabic, Vietnamese, Tagalog, and Korean, or available at [URL on FTC's website].

     (5) Safe harbor. A person complies with the requirement in paragraph (b)(1) of this
section if the person provides notice to a worker pursuant to paragraph (b)(4) of this section.
     (6) Optional notice in additional languages. In addition to providing the notice required
in paragraph (b)(1) of this section in English, a person is permitted to provide such notice in a language (or in languages) other than English or to include internet links to translations in
additional languages. If providing optional notice under this paragraph (b)(6), a person may use any Commission-provided translation of the model language in paragraph (b)(4) of this section.

For additional insights concerning this rule, see the post by my colleague Robert Sanders titled Legal Alert: Understanding the FTC’s New Rule on Non-Compete Agreements.