The Federal Trade Commission (FTC) issued a proposed rule early last year that would ban non-compete agreements across the country, which I wrote about here. After receiving over 26,000 comments to the FTC’s rule banning non-competes, it’s expected that the FTC will issue its final formal rule as early as next month, April 2024.
In anticipation of the FTC’s rule banning non-competes, the FTC has been contacting the governors of several states across America, urging the legislatures to sign non-compete bans for those states. Despite that urging, NY’s governor recently vetoed a proposed law that would ban non-competes in that state.
In recent years, other states have begun limiting non-competes through imposition of a salary threshold (i.e., the employee must make a certain amount of money before a non-compete can be effective) or banning non-competes for certain professions, such as physicians and nurses. South Carolina hasn’t changed its non-compete laws in any way recently, and courts here will still enforce a non-compete if it meets the necessary elements (reasonable in terms of time, geographic scope, etc.).
Speculation is that the FTC is likely moving towards a full ban on non-compete agreements, regardless of salary level (with an exception, perhaps, related to the sale of a business). Once that rule is issued, whether in April 2024 or otherwise, there will almost certainly be immediate legal challenges to the rule in the form of lawsuits filed in courts across the country. I would expect a judge somewhere to issue an injunction that places a hold on the rule until appellate courts (and perhaps the U.S. Supreme Court) review the rule and make a decision. It’s questionable whether the FTC even has the type of authority to issue this rule and enforce it, so the legal challenges may end of being successful in preventing the FTC’s order banning non-competes from going into effect.
Practically speaking for South Carolina employees with non-compete agreements, the rule is unlikely to change your current situation. You should still have your employment agreement reviewed by a South Carolina non-compete attorney so you fully understand your rights and obligations moving forward.
