The FTC’s final rule banning most non-compete clauses is set to take effect in April 2026, and the legal landscape is shifting fast. For in-house counsel, the question isn’t whether to pay attention — it’s what to do this week.
Here’s what’s actually changing: the rule broadly prohibits employers from entering into or enforcing non-compete agreements with workers. Existing non-competes for senior executives are grandfathered, but new ones are banned across the board. The definition of “senior executive” is narrow — it requires both a policy-making position and total annual compensation exceeding $151,164.
The challenges are real. Multiple lawsuits have been filed arguing the FTC exceeded its authority, and at least one federal court has issued a preliminary injunction. But smart GCs aren’t waiting for the litigation to resolve. They’re preparing now so they’re not scrambling if the rule takes effect as scheduled.
What you should do this week: audit your existing non-compete agreements, identify which employees fall under the senior executive exemption, review your standard employment agreements and offer letters, and start thinking about alternative restrictive covenants — non-solicitation and confidentiality agreements that may accomplish similar goals within the new framework.
