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The Federal Trade Commission's Proposed Rule to Ban Non-Compete Agreements – What's A Louisiana Business to Do?

The following are questions commonly asked about the Federal Trade Commission’s (“FTC”) proposed rule to ban non-compete agreements throughout the United States.

What is the FTC’s proposed rule?

The FTC’s proposed rule prohibits all non-compete agreements between employers and employees.

What about existing non-compete agreements between employers and employees?

The proposed rule outlaws existing non-compete provisions between employers and employees as of the date the proposed rule goes into effect.

Does the proposed rule affect non-compete agreements regarding the sale of a business?

Yes. The proposed rule bans any non-compete provisions in the sale of a business unless each selling party owns at least 25% ownership interest in the business entity being sold.

How does the proposed rule affect other relationships in Louisiana where non-compete agreements are allowed, including corporation/shareholders, limited liability company/ members, and partnership/partners?

It is unknown at this time.

Does the FTC’s proposed rule affect Louisiana’s law governing non-compete agreements?

Yes. The FTC’s proposed rule supersedes any state statute, regulation, or order inconsistent with the proposed rule.

Will the FTC’s proposed rule become a final rule and enforceable?

It is unknown whether the FTC’s proposed rule will become a final rule. However, it is clear that many business groups are opposing the FTC’s proposed rule through a 60-day comment period on the proposed rule. There will also be significant and substantial legal challenges to the rule if it becomes final.

If the proposed rule becomes law, what can Louisiana businesses do?

Louisiana non-compete law allows an employer to enter into both a non-compete agreement and a non-solicitation of customers agreement (“Non-Solicitation”). It does not appear that the FTC’s proposed rule affects non-solicitation agreements between employers and employees. While non-compete agreements are banned under the proposed rule, non-solicitation agreements may still be viable in Louisiana.

Are confidentiality agreements banned under the FTC’s proposed rule?

The proposed rule prohibits any contractual term that is a de facto non-compete clause that has the effect of prohibiting an employee from seeking or accepting employment with a competitor. A reasonable confidentiality provision protecting an employer’s confidential information may withstand scrutiny even if the proposed rule becomes effective.

What should Louisiana businesses do considering the FTC’s proposed rule?

Don’t panic. The proposed rule may never become final or become law. Significant legal challenges are on the horizon. If it does become law, non-solicitation agreements prohibiting ex-employees from soliciting your customers should still remain viable, together with reasonable confidentiality provisions contained in agreements with employees.

Jude C. Bursavich is a partner in the Baton Rouge, Louisiana, office of Breazeale, Sachse & Wilson, L.L.P. He can be reached at (225) 381-8045 (O) and/or (225) 921-5552 (C). He has over 30 years of experience in representing businesses against former employees throughout Louisiana.

The Federal Trade Commission's Proposed Rule to Ban Non-Compete Agreements – What's A Louisiana Business to Do?

The following are questions commonly asked about the Federal Trade Commission’s (“FTC”) proposed rule to ban non-compete agreements throughout the United States.

What is the FTC’s proposed rule?

The FTC’s proposed rule prohibits all non-compete agreements between employers and employees.

What about existing non-compete agreements between employers and employees?

The proposed rule outlaws existing non-compete provisions between employers and employees as of the date the proposed rule goes into effect.

Does the proposed rule affect non-compete agreements regarding the sale of a business?

Yes. The proposed rule bans any non-compete provisions in the sale of a business unless each selling party owns at least 25% ownership interest in the business entity being sold.

How does the proposed rule affect other relationships in Louisiana where non-compete agreements are allowed, including corporation/shareholders, limited liability company/ members, and partnership/partners?

It is unknown at this time.

Does the FTC’s proposed rule affect Louisiana’s law governing non-compete agreements?

Yes. The FTC’s proposed rule supersedes any state statute, regulation, or order inconsistent with the proposed rule.

Will the FTC’s proposed rule become a final rule and enforceable?

It is unknown whether the FTC’s proposed rule will become a final rule. However, it is clear that many business groups are opposing the FTC’s proposed rule through a 60-day comment period on the proposed rule. There will also be significant and substantial legal challenges to the rule if it becomes final.

If the proposed rule becomes law, what can Louisiana businesses do?

Louisiana non-compete law allows an employer to enter into both a non-compete agreement and a non-solicitation of customers agreement (“Non-Solicitation”). It does not appear that the FTC’s proposed rule affects non-solicitation agreements between employers and employees. While non-compete agreements are banned under the proposed rule, non-solicitation agreements may still be viable in Louisiana.

Are confidentiality agreements banned under the FTC’s proposed rule?

The proposed rule prohibits any contractual term that is a de facto non-compete clause that has the effect of prohibiting an employee from seeking or accepting employment with a competitor. A reasonable confidentiality provision protecting an employer’s confidential information may withstand scrutiny even if the proposed rule becomes effective.

What should Louisiana businesses do considering the FTC’s proposed rule?

Don’t panic. The proposed rule may never become final or become law. Significant legal challenges are on the horizon. If it does become law, non-solicitation agreements prohibiting ex-employees from soliciting your customers should still remain viable, together with reasonable confidentiality provisions contained in agreements with employees.

Jude C. Bursavich is a partner in the Baton Rouge, Louisiana, office of Breazeale, Sachse & Wilson, L.L.P. He can be reached at (225) 381-8045 (O) and/or (225) 921-5552 (C). He has over 30 years of experience in representing businesses against former employees throughout Louisiana.

The Federal Trade Commission's Proposed Rule to Ban Non-Compete Agreements – What's A Louisiana Business to Do?

The following are questions commonly asked about the Federal Trade Commission’s (“FTC”) proposed rule to ban non-compete agreements throughout the United States.

What is the FTC’s proposed rule?

The FTC’s proposed rule prohibits all non-compete agreements between employers and employees.

What about existing non-compete agreements between employers and employees?

The proposed rule outlaws existing non-compete provisions between employers and employees as of the date the proposed rule goes into effect.

Does the proposed rule affect non-compete agreements regarding the sale of a business?

Yes. The proposed rule bans any non-compete provisions in the sale of a business unless each selling party owns at least 25% ownership interest in the business entity being sold.

How does the proposed rule affect other relationships in Louisiana where non-compete agreements are allowed, including corporation/shareholders, limited liability company/ members, and partnership/partners?

It is unknown at this time.

Does the FTC’s proposed rule affect Louisiana’s law governing non-compete agreements?

Yes. The FTC’s proposed rule supersedes any state statute, regulation, or order inconsistent with the proposed rule.

Will the FTC’s proposed rule become a final rule and enforceable?

It is unknown whether the FTC’s proposed rule will become a final rule. However, it is clear that many business groups are opposing the FTC’s proposed rule through a 60-day comment period on the proposed rule. There will also be significant and substantial legal challenges to the rule if it becomes final.

If the proposed rule becomes law, what can Louisiana businesses do?

Louisiana non-compete law allows an employer to enter into both a non-compete agreement and a non-solicitation of customers agreement (“Non-Solicitation”). It does not appear that the FTC’s proposed rule affects non-solicitation agreements between employers and employees. While non-compete agreements are banned under the proposed rule, non-solicitation agreements may still be viable in Louisiana.

Are confidentiality agreements banned under the FTC’s proposed rule?

The proposed rule prohibits any contractual term that is a de facto non-compete clause that has the effect of prohibiting an employee from seeking or accepting employment with a competitor. A reasonable confidentiality provision protecting an employer’s confidential information may withstand scrutiny even if the proposed rule becomes effective.

What should Louisiana businesses do considering the FTC’s proposed rule?

Don’t panic. The proposed rule may never become final or become law. Significant legal challenges are on the horizon. If it does become law, non-solicitation agreements prohibiting ex-employees from soliciting your customers should still remain viable, together with reasonable confidentiality provisions contained in agreements with employees.

Jude C. Bursavich is a partner in the Baton Rouge, Louisiana, office of Breazeale, Sachse & Wilson, L.L.P. He can be reached at (225) 381-8045 (O) and/or (225) 921-5552 (C). He has over 30 years of experience in representing businesses against former employees throughout Louisiana.

The Federal Trade Commission's Proposed Rule to Ban Non-Compete Agreements – What's A Louisiana Business to Do?

The following are questions commonly asked about the Federal Trade Commission’s (“FTC”) proposed rule to ban non-compete agreements throughout the United States.

What is the FTC’s proposed rule?

The FTC’s proposed rule prohibits all non-compete agreements between employers and employees.

What about existing non-compete agreements between employers and employees?

The proposed rule outlaws existing non-compete provisions between employers and employees as of the date the proposed rule goes into effect.

Does the proposed rule affect non-compete agreements regarding the sale of a business?

Yes. The proposed rule bans any non-compete provisions in the sale of a business unless each selling party owns at least 25% ownership interest in the business entity being sold.

How does the proposed rule affect other relationships in Louisiana where non-compete agreements are allowed, including corporation/shareholders, limited liability company/ members, and partnership/partners?

It is unknown at this time.

Does the FTC’s proposed rule affect Louisiana’s law governing non-compete agreements?

Yes. The FTC’s proposed rule supersedes any state statute, regulation, or order inconsistent with the proposed rule.

Will the FTC’s proposed rule become a final rule and enforceable?

It is unknown whether the FTC’s proposed rule will become a final rule. However, it is clear that many business groups are opposing the FTC’s proposed rule through a 60-day comment period on the proposed rule. There will also be significant and substantial legal challenges to the rule if it becomes final.

If the proposed rule becomes law, what can Louisiana businesses do?

Louisiana non-compete law allows an employer to enter into both a non-compete agreement and a non-solicitation of customers agreement (“Non-Solicitation”). It does not appear that the FTC’s proposed rule affects non-solicitation agreements between employers and employees. While non-compete agreements are banned under the proposed rule, non-solicitation agreements may still be viable in Louisiana.

Are confidentiality agreements banned under the FTC’s proposed rule?

The proposed rule prohibits any contractual term that is a de facto non-compete clause that has the effect of prohibiting an employee from seeking or accepting employment with a competitor. A reasonable confidentiality provision protecting an employer’s confidential information may withstand scrutiny even if the proposed rule becomes effective.

What should Louisiana businesses do considering the FTC’s proposed rule?

Don’t panic. The proposed rule may never become final or become law. Significant legal challenges are on the horizon. If it does become law, non-solicitation agreements prohibiting ex-employees from soliciting your customers should still remain viable, together with reasonable confidentiality provisions contained in agreements with employees.

Jude C. Bursavich is a partner in the Baton Rouge, Louisiana, office of Breazeale, Sachse & Wilson, L.L.P. He can be reached at (225) 381-8045 (O) and/or (225) 921-5552 (C). He has over 30 years of experience in representing businesses against former employees throughout Louisiana.

The Federal Trade Commission's Proposed Rule to Ban Non-Compete Agreements – What's A Louisiana Business to Do?

The following are questions commonly asked about the Federal Trade Commission’s (“FTC”) proposed rule to ban non-compete agreements throughout the United States.

What is the FTC’s proposed rule?

The FTC’s proposed rule prohibits all non-compete agreements between employers and employees.

What about existing non-compete agreements between employers and employees?

The proposed rule outlaws existing non-compete provisions between employers and employees as of the date the proposed rule goes into effect.

Does the proposed rule affect non-compete agreements regarding the sale of a business?

Yes. The proposed rule bans any non-compete provisions in the sale of a business unless each selling party owns at least 25% ownership interest in the business entity being sold.

How does the proposed rule affect other relationships in Louisiana where non-compete agreements are allowed, including corporation/shareholders, limited liability company/ members, and partnership/partners?

It is unknown at this time.

Does the FTC’s proposed rule affect Louisiana’s law governing non-compete agreements?

Yes. The FTC’s proposed rule supersedes any state statute, regulation, or order inconsistent with the proposed rule.

Will the FTC’s proposed rule become a final rule and enforceable?

It is unknown whether the FTC’s proposed rule will become a final rule. However, it is clear that many business groups are opposing the FTC’s proposed rule through a 60-day comment period on the proposed rule. There will also be significant and substantial legal challenges to the rule if it becomes final.

If the proposed rule becomes law, what can Louisiana businesses do?

Louisiana non-compete law allows an employer to enter into both a non-compete agreement and a non-solicitation of customers agreement (“Non-Solicitation”). It does not appear that the FTC’s proposed rule affects non-solicitation agreements between employers and employees. While non-compete agreements are banned under the proposed rule, non-solicitation agreements may still be viable in Louisiana.

Are confidentiality agreements banned under the FTC’s proposed rule?

The proposed rule prohibits any contractual term that is a de facto non-compete clause that has the effect of prohibiting an employee from seeking or accepting employment with a competitor. A reasonable confidentiality provision protecting an employer’s confidential information may withstand scrutiny even if the proposed rule becomes effective.

What should Louisiana businesses do considering the FTC’s proposed rule?

Don’t panic. The proposed rule may never become final or become law. Significant legal challenges are on the horizon. If it does become law, non-solicitation agreements prohibiting ex-employees from soliciting your customers should still remain viable, together with reasonable confidentiality provisions contained in agreements with employees.

Jude C. Bursavich is a partner in the Baton Rouge, Louisiana, office of Breazeale, Sachse & Wilson, L.L.P. He can be reached at (225) 381-8045 (O) and/or (225) 921-5552 (C). He has over 30 years of experience in representing businesses against former employees throughout Louisiana.

The Federal Trade Commission's Proposed Rule to Ban Non-Compete Agreements – What's A Louisiana Business to Do?

The following are questions commonly asked about the Federal Trade Commission’s (“FTC”) proposed rule to ban non-compete agreements throughout the United States.

What is the FTC’s proposed rule?

The FTC’s proposed rule prohibits all non-compete agreements between employers and employees.

What about existing non-compete agreements between employers and employees?

The proposed rule outlaws existing non-compete provisions between employers and employees as of the date the proposed rule goes into effect.

Does the proposed rule affect non-compete agreements regarding the sale of a business?

Yes. The proposed rule bans any non-compete provisions in the sale of a business unless each selling party owns at least 25% ownership interest in the business entity being sold.

How does the proposed rule affect other relationships in Louisiana where non-compete agreements are allowed, including corporation/shareholders, limited liability company/ members, and partnership/partners?

It is unknown at this time.

Does the FTC’s proposed rule affect Louisiana’s law governing non-compete agreements?

Yes. The FTC’s proposed rule supersedes any state statute, regulation, or order inconsistent with the proposed rule.

Will the FTC’s proposed rule become a final rule and enforceable?

It is unknown whether the FTC’s proposed rule will become a final rule. However, it is clear that many business groups are opposing the FTC’s proposed rule through a 60-day comment period on the proposed rule. There will also be significant and substantial legal challenges to the rule if it becomes final.

If the proposed rule becomes law, what can Louisiana businesses do?

Louisiana non-compete law allows an employer to enter into both a non-compete agreement and a non-solicitation of customers agreement (“Non-Solicitation”). It does not appear that the FTC’s proposed rule affects non-solicitation agreements between employers and employees. While non-compete agreements are banned under the proposed rule, non-solicitation agreements may still be viable in Louisiana.

Are confidentiality agreements banned under the FTC’s proposed rule?

The proposed rule prohibits any contractual term that is a de facto non-compete clause that has the effect of prohibiting an employee from seeking or accepting employment with a competitor. A reasonable confidentiality provision protecting an employer’s confidential information may withstand scrutiny even if the proposed rule becomes effective.

What should Louisiana businesses do considering the FTC’s proposed rule?

Don’t panic. The proposed rule may never become final or become law. Significant legal challenges are on the horizon. If it does become law, non-solicitation agreements prohibiting ex-employees from soliciting your customers should still remain viable, together with reasonable confidentiality provisions contained in agreements with employees.

Jude C. Bursavich is a partner in the Baton Rouge, Louisiana, office of Breazeale, Sachse & Wilson, L.L.P. He can be reached at (225) 381-8045 (O) and/or (225) 921-5552 (C). He has over 30 years of experience in representing businesses against former employees throughout Louisiana.