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FTC Bans New Noncompete Agreements: Implications for Dental Practices

On April 23, the Federal Trade Commission made a final ruling banning all NEW noncompete agreements, which are legal clauses that prevent employees and contractors from working for competitors or in a similar line of business after leaving their current employment. The final rule will go into effect as early as September 2024.

After the rule’s enactment, all businesses will be prohibited from initiating noncompete agreements with employees and contractors. Businesses will also be required to notify employees with existing noncompete agreements that they will no longer be enforceable by law. It is important to note that the final rule does not prohibit exclusivity agreements, which require that workers only work for a single employer or are banned from working for a competing practice.

Exception to the Rule: Senior Executives

The FTC ruled that existing noncompete agreements will remain in effect for senior executives who are “in a policy-making position” and make at least $151,164 annually. New noncompete agreements for senior executives after the enactment of the final rule will be legally prohibited. Dentists who are unclear if this senior executive exemption applies to their existing noncompete agreement can seek legal counsel. The American Bar Association has a free Lawyer Referral Directory, or dentists can reach out to their state dental boards for legal referral recommendations.

The American Association of Endodontists does not provide legal advice, and the following information serves solely as guidance for dental practices.