How FTC’s new noncompete rules could impact marketing industry

The Federal Trade Commission today finalized new rules banning noncompete clauses in employment contracts. The federal regulations will affect hiring practices in the marketing industry because brands and agencies have used them to keep executives from moving to competitors. Also read: New rules to have ‘huge impact’ on marketing The FTC is allowing existing noncompetes for senior executives to remain in place. But existing noncompetes for everyone else will no longer be enforceable once the rules take effect, which will occur 120 days after publication in the Federal Register. Employers cannot enter into new noncompetes for senior execs, defined as those making more than $151,164 annually who are in policy-making positions. The FTC estimates nearly one in five Americans are subject to noncompetes. The rules were approved by a 3-2 vote with two Republican members voting no. “Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina M. Khan said in a statement. When the rules were first proposed, ad lawyer Linda Goldstein of BakerHostetler told Ad Age that they “would have a huge impact on the ad industry because noncompetes are pretty much a standard clause in any senior-level executive compensation or employment agreement.” “It’s a very dynamic issue,” Anomaly Founding Partner Jason DeLand said at the time. “As we get more and more into the post-Covid world of everyone having a side hustle, it’s getting very, very difficult to enforce noncompetes.” Read more from Ad Age's original coverage about how the rules could affect the marketing industry.

How FTC’s new noncompete rules could impact marketing industry

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