The FTC tried to ban non-compete agreements nationwide in April 2024, but legal challenges have put this rule on hold. Here is what you should know about the current situation and its impact on Indiana.
Current status of the FTC’s non-compete ban
The FTC wanted to stop non-compete agreements in all states, including Indiana. However, a Texas federal court blocked this rule in August 2024, saying the FTC lacked the power to make such a broad ban. The FTC has appealed, but the case is still ongoing. For now, the rule remains unenforceable.
Implications for Indiana employers and employees
Indiana state laws still govern non-compete agreements while the FTC’s rule is on hold. Indiana enforces these agreements if they meet specific standards:
- Reasonable scope and duration: The agreement must have reasonable limits on where and how long it applies.
- Protecting business interests: It must safeguard legitimate business concerns, like trade secrets or meaningful customer relationships.
- Fair exchange: Employees must receive something valuable in exchange for agreeing to the non-compete, such as a job offer or promotion.
Both employers and employees need to understand these rules to follow Indiana law.
What you should do
Employers should ensure that their non-compete agreements are clear and protect real business interests. If they seem too strict, they might want to consider other options, such as non-disclosure agreements.
Employees should know their rights. If asked to sign a non-compete, get legal advice to ensure it is fair and will not limit future job options too much.
