FTC Noncompete Rule: What Turkish Companies with U.S. Employees Need to Know

In April 2024, the Federal Trade Commission (FTC) issued a final rule that would ban most noncompete agreements for U.S. workers. The rule was scheduled to take effect on September 4, 2024, but was blocked by a federal court in August 2024. As of 2025, the rule remains subject to ongoing litigation, and its ultimate fate is uncertain.

Despite the litigation uncertainty, the FTC's noncompete rule has significant implications for Turkish companies with U.S. employees — both in terms of the potential future prohibition on noncompetes and the alternative tools available to protect legitimate business interests.

The FTC's noncompete rule would:

• Ban new noncompete agreements for all U.S. workers (with limited exceptions)
• Void existing noncompete agreements for most workers
• Require employers to notify workers that their existing noncompete agreements are no longer enforceable

The rule includes limited exceptions:

• Senior executives: Existing noncompete agreements for "senior executives" (workers earning more than $151,164 annually who are in policy-making positions) would remain enforceable
• Sale of business: Noncompete agreements entered into in connection with the bona fide sale of a business would remain enforceable
• Franchisees: The rule does not apply to franchisees

The rule would apply to:

• All U.S. workers, regardless of industry or occupation
• Both employees and independent contractors
• Both new and existing noncompete agreements (with the senior executive exception for existing agreements)

In August 2024, a federal district court in Texas issued a nationwide injunction blocking the FTC's noncompete rule from taking effect. The court held that the FTC lacked statutory authority to issue the rule.

The FTC appealed the decision to the Fifth Circuit Court of Appeals. As of early 2025, the appeal is pending.

The litigation creates significant uncertainty for employers:

• If the Fifth Circuit upholds the injunction, the rule will not take effect (unless the Supreme Court reverses)
• If the Fifth Circuit reverses the injunction, the rule could take effect quickly
• The Supreme Court's 2024 decision in Loper Bright Enterprises v. Raimondo (overruling Chevron deference) may affect the FTC's authority to issue the rule

Recommendation: Turkish companies with U.S. employees should monitor the litigation closely and prepare for both outcomes.

Regardless of the FTC rule's fate, state law governs the enforceability of noncompete agreements in the United States. State law varies significantly:

• California: Noncompete agreements are generally void and unenforceable (with very limited exceptions)
• North Dakota: Noncompete agreements are generally void
• Oklahoma: Noncompete agreements are generally void
• Minnesota: Noncompete agreements entered into after January 1, 2023 are void

• New York: Noncompetes are enforceable if reasonable in scope, duration, and geographic area; recent legislation has proposed significant restrictions
• Florida: Noncompetes are enforceable if they protect a legitimate business interest and are reasonable in scope and duration
• Texas: Noncompetes are enforceable if ancillary to an otherwise enforceable agreement and reasonable in scope

Turkish companies with U.S. employees in California, North Dakota, Oklahoma, or Minnesota cannot rely on noncompete agreements to protect their business interests — regardless of the FTC rule's outcome. These companies must rely on other tools (trade secret protection, NDAs, non-solicitation agreements).

Even if noncompete agreements are unavailable or unenforceable, Turkish companies can protect their legitimate business interests through:

The Defend Trade Secrets Act (DTSA) provides federal protection for trade secrets. To qualify for trade secret protection, the information must:

• Be a trade secret (information that derives economic value from not being generally known)
• Be subject to reasonable measures to maintain its secrecy

Practical steps:

• Identify and document trade secrets
• Implement access controls and confidentiality procedures
• Include trade secret provisions in employment agreements
• Conduct exit interviews and remind departing employees of their trade secret obligations

NDAs prohibit employees from disclosing confidential information to third parties. Unlike noncompetes, NDAs are generally enforceable in all states.

Key NDA provisions:

• Definition of confidential information (broad but specific)
• Obligations during and after employment
• Return of confidential information upon termination
• Remedies for breach (injunctive relief, damages)

Non-solicitation agreements prohibit employees from soliciting the employer's customers or employees after leaving. Non-solicitation agreements are generally more enforceable than noncompetes because they are narrower in scope.

Customer non-solicitation: Prohibits the departing employee from soliciting the employer's customers for a specified period after termination.

Employee non-solicitation: Prohibits the departing employee from recruiting the employer's employees for a specified period after termination.

A garden leave clause requires an employee to continue receiving their salary during a notice period but prohibits them from working for a competitor during that period. Garden leave clauses are generally more enforceable than noncompetes because the employee continues to be compensated.

Employment agreements should include provisions assigning all intellectual property created by the employee in the course of their employment to the employer.

1. Audit existing noncompete agreements: Review all existing noncompete agreements with U.S. employees to assess their enforceability under applicable state law.

2. Prepare for the FTC rule: Even if the FTC rule is currently blocked, prepare for the possibility that it will take effect. Develop a plan for notifying employees and transitioning to alternative protective measures.

3. Strengthen trade secret protections: Regardless of the noncompete landscape, strengthen your trade secret identification, documentation, and protection procedures.

4. Implement robust NDAs and non-solicitation agreements: Ensure that all U.S. employees sign comprehensive NDAs and non-solicitation agreements.

5. Consult employment counsel: Employment law varies significantly by state. Engage U.S. employment counsel with experience in the states where your employees are located.

The FTC's noncompete rule — whether it ultimately takes effect or not — signals a significant shift in the U.S. approach to employee mobility and business protection. Turkish companies with U.S. employees must adapt their approach to protecting business interests, relying more heavily on trade secret protection, NDAs, and non-solicitation agreements.

ULF New York advises Turkish companies on U.S. employment law, noncompete agreements, trade secret protection, and employment agreement drafting. Contact us to discuss your U.S. workforce protection strategy.

This article is for informational purposes only and does not constitute legal advice. Employment law varies by state and is subject to change; consult qualified employment counsel for current guidance.