FTC Outlaws Most Noncompete Clauses

FTC Outlaws Most Noncompete Clauses

The Federal Trade Commission has outlawed the use of most noncompete clauses, freeing workers from restrictive agreements that often hampered their ability to change jobs or create new businesses in the same industry.

In a 3-2 vote, the commission issued a final rule, first proposed in 2023, that voids nearly all noncompete clauses and mandates that businesses that employ them tell workers that the clauses will no longer be enforceable 120 days after publication in the Federal Register.

The rule contains a draft letter that companies using noncompete clauses must send to affected workers. The letter makes it clear that they are allowed to seek and accept a job with any company or person, even if the firm is a competitor, and that they can start their own business, even if it competes with their current firm.

Some in the funeral service industry have used noncompete clauses, which can prevent licensed funeral directors from working in the same area as their previous employer or from opening a business that could be in direct competition. Some licensed funeral directors have hired counsel in attempt to break the clauses.

Specifically, the rule says it is an “unfair method of competition” for someone to:

  • Enter into or attempt to enter into a noncompete clause
  • Enforce or attempt to enforce a noncompete clause
  • Represent that the worker is subject to a noncompete clause

Overall, the new rule effects more than 30 million workers in the United States, including more than 3 million in New Jersey. The FTC found that the clauses depress salaries for workers and restrict their ability to find advancement in their industries.

The FTC said that current noncompete clauses for senior executives, who account for less than 1 percent of workers, will not be affected by the new rule. The commission concluded that senior executives are “less likely to be subject to the kind of acute, ongoing harms currently being suffered by other workers subject to existing noncompetes,” the rule states. Businesses, however, are forbidden from entering into new noncompete agreements with senior executives.

FTC Outlaws Most Noncompete Clauses

FTC Outlaws Most Noncompete Clauses

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Ask the Manager

The NJSFDA Manager of the Day program provides members with a resource for addressing and resolving problems that arise in the daily operations of their funeral homes. Here are some matters that were brought to the attention of the Manager of the Day in recent months.

Mailing Address vs. Residence on Death Certificates

A decedent used a PO box for a mailing address. Can this be entered as the address on the death certificate?

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I’ve been contacted by our area medical examiner and law enforcement about disinterring the remains of an unidentified body. Law enforcement is seeking a court order for the disinterment. Do they also need a disinterment permit to remove...
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A woman is coming in to make arrangements for her spouse, who died recently. She is deaf and communicates through sign language. Can I charge her for hiring an American Sign Language interpreter to assist during our meeting?

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