The FTC has made a major announcement regarding non-compete clauses that could shake up the transportation industry. Is it really a ban? Are there any exceptions? How will this impact our industry? While it's crucial to consult your attorney for personalized advice, here's our current understanding:
On April 23, 2024, the FTC released its “Final Non-Compete Clause Rule” which takes effect on September 4, 2024. Here’s what you need to know:
Key Highlights:
- Existing non-competes entered into before September 4 can’t be enforced unless you’re a “Senior Executive.”
- A “Senior Executive” earns over $151,164 annually and holds a policy-making role.
- New non-competes are banned for everyone, regardless of position, after September 4.
- Non-solicits remain in place unless they are so broad they effectively keep you out of the industry.
- States like California, which already ban non-competes, will not see any changes from this rule.
Impact on the Transportation Industry
What does this mean for 3PLs, brokers, and other transportation professionals?
- High-earning salespeople, previously restricted by non-competes, can now switch companies freely, provided they’re not in policy-making roles.
Employers are also required to notify employees with existing non-competes that these agreements are now unenforceable.
What This Means for Employees
This is great news for employees, offering more freedom in choosing employers. Those feeling stuck in roles with poor pay, benefits, or work culture can now look for better opportunities within the industry. However, industry-specific exemptions do exist.
Employees should still be aware of any non-solicitation agreements and remember that taking proprietary or confidential information from one employer to another is illegal.
Legal Challenges and Uncertainty
The new rule is currently facing legal challenges, and while it is set to take effect on September 4, the date could be postponed, or parts of the rule could be overturned.
Remember, this is not legal advice. Consult your attorney before taking any action. We strive to provide clarity on a topic that generates numerous questions daily.
