Interested in training for your team? Click here to learn more

FTC Final Rule Banning Noncompete Provisions: Impact on Deferred Compensation Plans

Scope of the Final Rule, Use of Restrictive Covenants, Challenges for Employers, Preparing for Compliance, and More

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, July 30, 2024

Recorded event now available

or call 1-800-926-7926

This CLE webinar will provide executive compensation and employee benefits counsel guidance on the impact of the recent FTC ban on noncompetes and next steps for amending and structuring compensation plans. The panel will discuss key provisions of the final rule impacting compensation structures, review state law considerations, and address what counsel and clients should be doing now to prepare for compliance despite legal challenges.

Description

On May 7, 2024, the FTC published a final rule banning the use of noncompete clauses in the workplace with limited exceptions and requiring employers to refrain from enforcing most existing noncompete agreements. This has a significant impact on current executive compensation arrangements and deferred compensation plans.

The final rule effectively covers any person or business operating for profit within the FTC's jurisdiction and imposes a ban on new noncompete agreements covering a wide range of employment arrangements, due to the broad definition of "worker" under the final rule. The rule also invalidates all existing noncompete provisions except for those with "senior executives" who are narrowly defined in the rule. In addition, the FTC states that whether a given contractual provision constitutes a "noncompete" clause is a fact-specific inquiry. However, the FTC did not specifically address how the final rule will apply to other restrictive covenants, such as non-solicitation clauses or nondisclosure agreements.

Counsel must understand the impact the FTC final rule has on executive compensation arrangements and deferred compensation structures. Before the rule's effective date, employers will be required to provide written notice to current or former workers that their noncompete clause cannot be legally enforced and will not be enforced against the worker, subject to limited exceptions.

Listen as our expert panel discusses key provisions of the final rule impacting compensation structures, state law considerations, and what counsel and clients should be doing now to prepare for compliance despite legal challenges.

READ MORE

Outline

  1. FTC final rule
  2. Legal challenges for employers
  3. Structuring deferred compensation amid FTC ban
  4. Next steps and preparing for compliance
    1. Contract review and revision
    2. Giving notice
    3. Other considerations
  5. State law updates

Benefits

The panel will discuss these and other key issues:

  • What businesses and workers are covered by the final rule?
  • How does the rule define noncompete clauses?
  • How will the rule affect other restrictive covenants?
  • What action must employers take under the new rule?
  • What is the impact to deferred compensation structures?
  • What interaction will the final rule have with state laws related to noncompete provisions?
  • How should counsel and their clients begin preparing for compliance?

Faculty

Katz, Meir
Meir D. Katz

Partner
Debevoise & Plimpton

Mr. Katz is a tax partner and member of the firm’s Executive Compensation & Employee Benefits Group. His...  |  Read More

O'Leary, Meredith
Meredith L. O'Leary

Partner
King & Spalding

Ms. O’Leary specializes in executive compensation and employee benefits issues in corporate transactions,...  |  Read More

Smith, Stefan
Stefan P. Smith

Partner
BakerHostetler

Mr. Smith utilizes his in-depth background in employee benefits and executive compensation law to advise public and...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video