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The Fate of Noncompete Agreements Under Trump 2.0
Noncompete agreements are a very common type of employment agreement through which employers prevent former employees from working for competitors for a certain amount of time after they quit or are terminated. Such agreements are controversial — on the one hand, they function as restraints on trade, but on the other, they protect an employer’s investments in their employees. With a new presidential administration on the horizon, employers and employees alike should get up to speed on the future of noncompete agreements, and a Norfolk noncompete lawyer can help.
The FTC’s April 2024 Rule
The Federal Trade Commission (FTC), under President Biden, issued a rule in April 2024 that would ban most noncompete agreements nationwide. The FTC characterizes such agreements as unfair methods of competition, arguing that they exploit workers’ bargaining power and are unnecessary restraints on trade. The April 2024 rule would make it unlawful for an employer to (1) enter into or attempt to enter into a noncompete agreement, (2) enforce or attempt to enforce a noncompete agreement, and (3) represent to a worker that the worker is bound by a noncompete agreement. In August, a Texas court blocked implementation of the rule, and the rule remains suspended pending an appeal.
The Republican Stance on Noncompete Agreements
Noncompete agreements fall into somewhat of a political gray area. Many Republicans support them because they are generally seen as being pro-business. But the party is far from unified on this issue. Several prominent Republicans, including Vice President-elect J.D. Vance, Missouri Senator Josh Hawley, and former Florida Congressman Matt Gaetz, have lauded the Biden administration’s FTC for its antitrust enforcement initiatives. And while both of the Republican commissioners at the FTC voted against the noncompete ban, they did so because they believe the FTC lacks the authority to issue the rule, not because they necessarily support all noncompete agreements.
The Future of FTC Leadership
The current chair of the FTC, Lina Khan, was appointed by President Biden in 2021. While she enjoys some Republican support, it is unlikely that she will remain chair once President-elect Trump takes office. For her replacement, President-elect Trump could either elevate one of the existing two Republican commissioners to chair or appoint an outsider.
The Most Likely Outcome
It’s unlikely that Lina Khan’s successor will continue the legal battle for the FTC’s noncompete ban, meaning that the nationwide ban is probably dead. However, that does not necessarily mean that noncompete agreements have a bright future. The movement to ban or restrict noncompete agreements at the state level (including in Virginia) has accelerated in recent years and shows few signs of slowing down.
Seek the Advice of a Norfolk Noncompete Lawyer
Regardless of what happens at the federal level, noncompete agreements remain valid and enforceable in Virginia — with some exceptions. For more information about drafting, enforcing, or fighting noncompete agreements, please speak to a Norfolk noncompete lawyer at Pierce / Jewett by calling 757-624-9323 or using our online contact form.