We recently wrote a blog about a new final rule promulgated by the Federal Trade Commission (FTC) prohibiting the enforcement of existing non-compete clauses and entry of new non-compete clauses as an unfair methods of competition, with limited exceptions.* One aspect of the final rule that we did not cover is the notice requirements to workers subject to prohibited non-compete clauses.
The final rule requires that any person who has entered a prohibited non-compete clause with a worker must provide individualized, clear, and conspicuous notice to such worker, whether current or former, subject to a prohibited non-compete clause. This notice must be given by September 4, 2024, the effective date of the final rule.
With respect to content, the notice must identify the person sending the notice who entered the non-compete clause with the worker and expressly state that the non-compete clause will not be, and cannot legally be, enforced against the worker. Importantly, the final rule only requires that the notice be written in English.
As for form and method of delivery, the notice may be delivered: (1) On paper by hand to the worker; (2) On paper by mail at the worker’s last known personal street address; (3) By email at an email address belonging to the worker; or (4) By text message at a mobile telephone number belonging to the worker. If, however, the person sending the notice does not have a record of a street address, email address, or mobile telephone number for a worker, notice is excused for that worker.
The best part of the final rule is that the FTC provides model notice language for everyone to utilize, and use of the model notice language satisfies the requisite notice under the final rule’s safe harbor provision.
While this notice requirement may seem like a daunting, time-consuming task, the final rule lays out the roadmap for everyone to follow. Starr Law Firm can help you navigate the applicability of the final rule, including its notice requirements, to you or your business.
*As of the date of this blog, the final rule was valid and in effect. Subsequently, on August 20, 2024, the United States District Court for the Northern District of Texas, in Ryan, LLC vs. FTC, invalidated the final rule and enjoined the FTC from implementing and enforcing the rule. As a result, the final rule is currently not in effect nor enforceable. However, the FTC may appeal the ruling and is involved in other legal proceedings related to the final rule. This blog will be updated as new information becomes available and will remain up pending final resolution of the relevant legal proceedings.
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