The Federal Trade Commission adopted a rule intended to prohibit most employment non-compete agreements nationwide, but the rule did not take effect after a federal court held that the FTC lacked authority to issue it and set the rule aside. As a result, non-compete enforceability continues to depend primarily on existing federal principles and state law, including Georgia's Restrictive Covenants Act.
What the FTC Rule Would Have Done
The rule would have broadly restricted new non-compete clauses and required notices concerning many existing restrictions, subject to limited exceptions. Employers and employees spent much of 2024 preparing for a major nationwide change in restrictive-covenant law.
The Rule Was Blocked
A federal court in Texas ruled against the FTC and prevented the rule from becoming effective. The current Fidlon Legal site reflects that the nationwide ban is not operative and that state restrictive-covenant law remains controlling for ordinary employment agreements.
What This Means in Georgia
Georgia's Restrictive Covenants Act generally permits reasonable non-compete, non-solicitation, and confidentiality restrictions when statutory requirements are satisfied. Georgia courts may have authority to modify certain overbroad covenants rather than simply declaring the entire restriction void.
Employees Should Not Assume a Covenant Is Invalid
An employee considering a competitor should review the actual agreement before accepting or announcing the new job. Enforceability can turn on the employee's role, the prohibited activities, geography, duration, customer relationships, choice-of-law language, and the facts surrounding the departure.
Employers Should Revisit Their Agreements
Even without the FTC rule, overly broad or poorly tailored agreements create unnecessary enforcement risk. Employers should use restrictions that protect legitimate business interests and fit the employee's role rather than relying on a one-size-fits-all covenant.
Other Federal Developments Still Matter
Federal agencies continue to scrutinize restrictive employment practices under other laws, including competition and labor statutes. The absence of the FTC's nationwide rule does not mean every restrictive covenant is automatically lawful.
See Non-Compete Agreements and the Georgia Non-Compete FAQ for additional information.