The Federal Trade Commission (FTC) issued a final rule on April 23, 2024, banning noncompetes and certain other post-employment restrictions nationwide (the final rule). The final rule would take effect on Sept. 4, 2024 (the effective date), but multiple lawsuits have been filed seeking to have the rule declared unlawful. If the final rule is upheld, Delaware’s approach to employment-related restrictive covenants will change significantly.

Prohibited Post-Employment Restrictions

The final rule bans most noncompete agreements across the United States. The FTC determined that noncompete clauses constitute “an unfair method of competition” in violation of Section 5 of the Federal Trade Commission Act (the act). The final rule prohibits employers from entering into noncompetes with workers on or after the effective date.