By Don Riddick, Esq.

I was recently asked about the FTC ruling on non-competes at a GVMA LEAP. This is one of the hottest legal topics for veterinarians, as so many veterinarians are subject to non-compete agreements today. The recent FTC rule banning some types of non-competes is set to become effective on September 4th, 2024. Before veterinarians under non-compete clauses start accepting job offers at the clinic across the street, carefully consider if the rule applies to you and when it is effective and make certain it has not been suspended by the courts.

The rule does not affect all non-compete agreements, and you may still be under a non-compete if you:

  • work for a non-profit, such as some shelters, rescues, or humane societies. 
  • work as “Senior Executives”, defined as earning more than $151,164 annually who are in a “policy-making position, and have an existing non-compete. This may apply to some hospital or regional medical executives.
  • work for a franchisee or as a franchisor of a practice or clinic.
  • have sold your practice or business.

As of May 6th, 2024, there are cases appealing the rule in Federal Courts in Texas and Pennsylvania. It is likely that the rule will be suspended pending the outcome of those cases and any appeals, meaning the rule may not become effective until after the election, or even into next year.  The cases, which have been brought by diverse business groups including Ryan Tax Relief, a tree care company, and the US Chamber of Commerce, are all almost identical in their claims. They claim that the rule is unconstitutional, in that the FTC as an agency doesn’t have the authority to render a substantial portion of existing and future non-compete contracts invalid, that it should have been left to the states or Congress, and that even if they had the authority, the FTC did not follow agency rulemaking requirements to narrowly tailor the rule. It’s expected to be a hotly contested legal battle over the 570-page rule, and until its complete, you may want to exercise caution in relying upon the rule if it becomes effective on September 4th.

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