Adams and Reese Partner Timothy Brinks was interviewed in an article, “How the FTC’s Non-Compete Rule Will Impact Commercial Insurers,” published in P&C Specialist, a news and business intelligence source covering the commercial lines businesses of P&C insurers.
The publication interviewed attorneys on the impact that the Federal Trade Commission’s new rule banning non-compete agreements will have on commercial P&C insurers, should the new rule go into effect 120 days after being published in the Federal Register. However, the rule has already been threatened with legal challenges, particularly by the United States Chamber of Commerce.
“If the new FTC rule survives legal challenges and goes into effect, it will have significant and immediate impacts on the commercial insurance and brokerage industries,” said Brinks. “Non-compete agreements are common in these industries, and this new rule will not only ban new non-competes, but also void most existing non-competes.”
Brinks suggested that insurers “should closely review both their new and existing employment agreements with this new FTC rule in mind, and consider bolstering these agreements with additional protections, such as trade secret and non-solicitation restrictions and confidentiality agreements that do not run afoul of the new FTC rule.”
Under the FTC rule, existing non-compete agreements for the vast majority of workers will no longer be enforceable. Existing non-compete agreements for senior executives – defined as workers earning more than $151,164 annually and who are in “policy-making positions” – will remain in effect under the rule. Employers are banned from entering into or attempting to enforce any new non-competes, even those involving senior executives. For all other employees, existing non-compete agreements will become unenforceable. Moreover, the rule requires employers to notify those employees that their non-compete agreement will not be enforced against them.
The FTC rule focuses on employment restrictions. The rule excludes from its scope non-compete clauses entered pursuant to “a bona fide sale of a business,” which extends to the sale of a person’s ownership interest in an entity or substantially all of a business entity’s operating assets.
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Brinks is a Litigation Partner in the Adams and Reese New Orleans office, primarily practicing in business and commercial litigation, insurance, labor and employment, and professional liability defense.