IRS, FTC, CFPB Workplace Compliance News & Resources
All employers are responsible for reporting income and collecting and remitting withholding taxes, so it’s important to understand any changes that they will need to implement with their payroll system.
Here is the latest news from the Internal Revenue Service (IRS), Federal Trade Commission (FTC), and Consumer Financial Protection Bureau (CFPB). Be sure to seek legal counsel when you’re looking for how these changes will directly impact your business.
Past IRS Workplace Compliance News
Who: All employers
When: Effective November 3, 2025
The Federal Trade Commission (FTC) issued a rule in April 2024 that banned all non-compete agreements nationwide. That ban was challenged in a Texas federal district court, and the judge declared it unlawful in the Ryan, LLC v. FTC case. Therefore, the ban did not take effect on September 4, 2024. Continued litigation and other factors led the FTC to abandon its appeals and agree to vacate the Biden-era April 2024 rule on September 5, 2025, and it will no longer be used in litigation.
On September 4, 2025, the FTC launched a public inquiry to understand the scope, prevalence, and effects of post-employment non-compete agreements, along with enforcement considerations. The public has until November 3, 2025, to submit feedback via Regulations.gov.
On September 10, 2025, the FTC sent warning letters to healthcare employers, advising them to review their employment agreements to ensure they are not overly broad and comply with the law. All employers should ensure that their non-compete clauses are reasonable and tailored to protect business interests.
The FTC continues to investigate instances of the unfair use of post-employment non-competes on a case-by-case basis under Section 5 of the FTC Act. State attorneys and private litigants continue to bring an increasing number of cases that challenge non-compete agreements.
The FTC non-compete rule is no longer a threat, but employers should remain cautious when implementing non-compete agreements. Additionally, states continue to enact their own laws against non-compete agreements, and employers need to stay up to date on the laws that affect their operations.
How:
- Review your non-compete clauses and agreements to ensure they comply with applicable laws.
- Stay up-to-date on state law changes.
- Audit non-compete and similar agreements.
- Train HR personnel and management on best practices and alternatives to non-competes.
Additional Resources:
Public Inquiry Request for Information Regarding Employer Noncompete Agreements
Who: All employers
When: Appeal filed on October 18, 2024; monitor
On October 18, 2024, the Federal Trade Commission (FTC) filed an appeal with the Fifth Circuit Court of Appeals after Texas federal court judge Ada Brown set aside the FTC Noncompete Rule for all employers nationwide on August 20, 2024. The court stated that the FTC had exceeded its authority by creating the rule and that the rule was arbitrary and capricious. The ruling means that U.S. employers do not have to comply with the noncompete rule that went into effect on September 4, 2024, which effectively banned the use of noncompete clauses in employment contracts.
Though employers can still use noncompete clauses for now, the outcome of this case could reinstate the ban.
How:
- Review your restrictive covenants to ensure they comply with state laws.
- Monitor for the outcome of the FTC appeal.
Additional Resources:
Who: All employers
When: Effective immediately
On August 14, 2024, Florida judge Timothy Corrigan blocked the Federal Trade Commission’s (FTC) ban on employee noncompete agreements (the “Noncompete Rule”) only for the plaintiffs in the case—stating that the FTC had acted outside of its statutory authority—but did not issue a nationwide injunction for all employers. In a separate lawsuit, Pennsylvania judge Kelley B. Hodge ruled on July 23, 2024, in favor of the Noncompete Rule. On August 20, 2024, Texas federal court judge Ada Brown set aside the FTC Noncompete Rule for all employers nationwide after having initially blocked it only for the plaintiffs in the case. The court indicated that the FTC had exceeded its authority by creating the rule and that the rule was arbitrary and capricious.
Due to this ruling, employers no longer have to comply with the Noncompete Rule, which was to take effect on September 4, 2024, and required employers to rewrite their employment agreement templates and provide notices to employees that their noncompete agreements were unenforceable. Employers can continue to use and enforce noncompete agreements in accordance with the applicable state laws.
How: Monitor for the FTC to appeal the ruling to the Fifth Circuit Court of Appeals.
Additional Resources:
Who: All employers
When: Effective September 4, 2024
On April 23, 2024, the Federal Trade Commission (FTC) voted to approve a Final Rule that bans noncompete agreements for all employers. A noncompete clause prevents employees from engaging in competitive activities for a period of time after leaving an organization. The Final Rule bans any new noncompete agreements with workers on or after the effective date and requires employers to notify workers that existing noncompete provisions are invalid.
There are narrow exceptions to the ban, including noncompete clauses associated with the sale of a business. The Final Rule allows for the continuance of existing noncompete agreements for all current senior executives, defined as employees who earn $151,164 annually and make policy decisions. The FTC states that banning noncompete agreements can lower healthcare costs, increase the number of new businesses, raise innovation and higher wages, and protect workers who want to change jobs.
On July 3, 2024, a Texas Federal judge blocked the Federal Trade Commission’s (FTC) Final Rule on noncompete agreements, which is set to go into effect September 4, 2024. The plaintiffs argued that the FTC did not have the authority to create the ban. The injunction applied only to the plaintiffs in that specific case. The judge will consider the merits of the law and decide whether to issue a nationwide injunction by August 30, 2024.
In a separate lawsuit brought in the U.S. District Court for the Eastern District of Pennsylvania, the judge denied the motion to enjoin the FTC’s ban on noncompete agreements on July 23, 2024, holding that the FTC does have legal authority to impose the ban.
Employers can use other alternative agreements, such as non-solicitation and nondisclosure clauses, that prevent the sharing or leak of confidential information and trade secrets. If the non-solicitation or nondisclosure agreement is disguised as a noncompete agreement, it will not be enforceable under the ban. The FTC ruling supersedes state laws that prohibit noncompete agreements, unless the state law provides greater protections.
Employers should prepare for the ban to go into effect while monitoring developments in legal challenges. By September 4, 2024, employers must notify current and former workers that the noncompete clauses they were subject to are invalid. The notice must be hand delivered, emailed, mailed, or sent via text message. Model notices are available on the FTC website.
How:
- Review your noncompete agreements and restrictive covenants and update them to comply with the law.
- Prepare a notice to give to current and former workers by September 4, 2024, that explains that noncompete clauses are now void and unenforceable.
- Through written policies and training, periodically remind employees of their ongoing duty not to disclose the company’s proprietary information and/or trade secrets.
- Consult legal counsel to ensure compliance.
- Continue to monitor the legal challenges to the final ruling.
Additional Resources:
Past FTC Workplace Compliance News
Who: All employers
When: Effective September 4, 2024
On April 23, 2024, the Federal Trade Commission (FTC) voted to approve a Final Rule that bans noncompete agreements for all employers. A noncompete clause prevents employees from engaging in competitive activities for a period of time after leaving an organization. The Final Rule bans any new noncompete agreements with workers on or after the effective date and requires employers to notify workers that existing noncompete provisions are invalid.
There are narrow exceptions to the ban, including noncompete clauses associated with the sale of a business. The Final Rule allows for the continuance of existing noncompete agreements for all current senior executives, defined as employees who earn $151,164 annually and make policy decisions. The FTC states that banning noncompete agreements can lower healthcare costs, increase the number of new businesses, raise innovation and higher wages, and protect workers who want to change jobs.
On July 3, 2024, a Texas Federal judge blocked the Federal Trade Commission’s (FTC) Final Rule on noncompete agreements, which is set to go into effect September 4, 2024. The plaintiffs argued that the FTC did not have the authority to create the ban. The injunction applied only to the plaintiffs in that specific case. The judge will consider the merits of the law and decide whether to issue a nationwide injunction by August 30, 2024.
In a separate lawsuit brought in the U.S. District Court for the Eastern District of Pennsylvania, the judge denied the motion to enjoin the FTC’s ban on noncompete agreements on July 23, 2024, holding that the FTC does have legal authority to impose the ban.
Employers can use other alternative agreements, such as non-solicitation and nondisclosure clauses, that prevent the sharing or leak of confidential information and trade secrets. If the non-solicitation or nondisclosure agreement is disguised as a noncompete agreement, it will not be enforceable under the ban. The FTC ruling supersedes state laws that prohibit noncompete agreements, unless the state law provides greater protections.
Employers should prepare for the ban to go into effect while monitoring developments in legal challenges. By September 4, 2024, employers must notify current and former workers that the noncompete clauses they were subject to are invalid. The notice must be hand delivered, emailed, mailed, or sent via text message. Model notices are available on the FTC website.
How:
- Review your noncompete agreements and restrictive covenants and update them to comply with the law.
- Prepare a notice to give to current and former workers by September 4, 2024, that explains that noncompete clauses are now void and unenforceable.
- Through written policies and training, periodically remind employees of their ongoing duty not to disclose the company’s proprietary information and/or trade secrets.
- Consult legal counsel to ensure compliance.
- Continue to monitor the legal challenges to the final ruling.
Additional Resources:
Who: All employers
When: 120 days after publication in the Federal Register
On April 23, 2024, the Federal Trade Commission (FTC) voted to approve a final rule that bans noncompete agreements between U.S. employers and employees. A noncompete clause prevents employees from engaging in competitive activities for a period of time after leaving an organization. There is an exception for existing noncompete agreements that apply to senior executives, who are defined as employees that earn $151,164 annually and make policy decisions. Business sales are also exempt from noncompete agreements. All other noncompete agreements become unenforceable 120 days after publication of the final rule, and no new noncompete agreements are allowed.
With this ruling, the FTC intends to promote competition, protect workers who want to change jobs, and increase the number of new businesses. The agency believes the ban will result in lower health care costs, increased innovation, and higher average wages.
Current state laws that prohibit noncompete agreements are preempted by this ruling unless the state law offers more protection. Non-solicitation and nondisclosure clauses are still allowed to prevent the sharing or leak of confidential information and trade secrets. If the non-solicitation or nondisclosure agreement is actually a disguised noncompete agreement, it is not enforceable.
Employers must notify current employees and former employees that noncompete agreements are no longer enforceable. The notice must be hand delivered, emailed, mailed, or sent via text message. The FTC published model notices.
The U.S. Chamber of Commerce and businesses have filed lawsuits against the FTC to challenge the final rule.
How:
- Review your noncompete agreements and restrictive covenants to ensure compliance with the law.
- Provide a notice to current and former employees.
- Consult legal counsel to ensure compliance.
- Continue to monitor for legal challenges to the final ruling.
Additional Resources:
Fact Sheet on the FTC’s Noncompete Rule
The Federal Trade Commission (FTC) voted to amend and expand the Safeguards Rule to require non-banking financial institutions, like dealerships, to report data security breaches.
Data Security Breaches Affecting 500+ People Must Be Reported to FTC
The amendment states that organizations subject to the Safeguards Rule will have to notify the FTC within 30 days after the discovery of a data security breach that includes the information of at least 500 consumers.
This includes a notification to the FTC if unencrypted customer information has been accessed without authorization by the impacted consumers. That notice must include specific information about the event, including the number of impacted or those potentially impacted.
Background
In 2021, final amendments were issued and updated in the Safeguards Rule. Those amendments took effect in January 2022, with a compliance date by this past June. Those amendments didn’t include a data breach reporting requirement.
Later in 2021, the agency separately issued a proposal to amend the Rule to include this data breach reporting requirement. Following a public comment period, the agency has been reviewing those responses.
What Happens Now?
Once this amendment is published in the Federal Register, it will take effect 180 days from the publish date.
KPA will continue to monitor this topic and inform you as we learn more.
If you use KPA or ComplyNet’s Safeguards solutions, we will update your policies and procedures to reflect any changes.
If you don’t have a solution in place now, schedule time to talk to us about how we can help you in the case of a cybersecurity breach. You will need to review your current Privacy & Safeguards solutions and ensure that you are prepared in the case of a cybersecurity breach.
Who: All employers
When: Effective immediately
On April 25, 2023, the Federal Trade Commission (FTC), the Civil Rights Division of the U.S. Department of Justice (DOJ), the Consumer Financial Protection Bureau (CFPB), and the U.S. Equal Employment Opportunity Commission (EEOC) jointly released an official statement on their efforts to address discrimination and bias when using automated systems. They define automated systems as software and algorithmic processes, which includes artificial intelligence (AI).
The statement warns that automated systems can perpetuate unlawful bias and discrimination when applied to credit decisions, housing availability, and employment opportunities. The statement gives an overview of each agency’s position on the use of AI and links to key AI-related documents published by each agency. The statement summarizes sources of potential discrimination and bias, including:
- Insufficient or faulty data and datasets,
- Lack of transparency in how the system works, and
- Faulty design and use.
The agencies concluded by saying that they will use their collective authority to protect individuals’ rights.
How:
- Evaluate automated decision-making outcomes for potential bias and discriminatory impact.
- Control for biases in training datasets.
- Enhance your risk-assessment and compliance-management systems as needed to detect, remediate, and prevent risks stemming from use of automated systems.
- Review how you will use automated systems going forward.
Additional Resources:
Joint Statement on Enforcement Efforts Against Discrimination and Bias in Automated Systems
Past CFPB Workplace Compliance News
Who: All employers
When: Effective immediately
On April 25, 2023, the Federal Trade Commission (FTC), the Civil Rights Division of the U.S. Department of Justice (DOJ), the Consumer Financial Protection Bureau (CFPB), and the U.S. Equal Employment Opportunity Commission (EEOC) jointly released an official statement on their efforts to address discrimination and bias when using automated systems. They define automated systems as software and algorithmic processes, which includes artificial intelligence (AI).
The statement warns that automated systems can perpetuate unlawful bias and discrimination when applied to credit decisions, housing availability, and employment opportunities. The statement gives an overview of each agency’s position on the use of AI and links to key AI-related documents published by each agency. The statement summarizes sources of potential discrimination and bias, including:
- Insufficient or faulty data and datasets,
- Lack of transparency in how the system works, and
- Faulty design and use.
The agencies concluded by saying that they will use their collective authority to protect individuals’ rights.
How:
- Evaluate automated decision-making outcomes for potential bias and discriminatory impact.
- Control for biases in training datasets.
- Enhance your risk-assessment and compliance-management systems as needed to detect, remediate, and prevent risks stemming from use of automated systems.
- Review how you will use automated systems going forward.
Additional Resources:
Joint Statement on Enforcement Efforts Against Discrimination and Bias in Automated Systems
Who: All employers
When: By March 20, 2024
The Consumer Financial Protection Bureau (CFPB) released an updated “A Summary of Your Rights Under the Fair Credit Reporting Act” notice on March 17, 2023. The notice explains how the Fair Credit Reporting Act (FCRA) protects consumers’ credit information. Changes include updated contact information for federal agencies, deletion of obsolete businesses, and formatting corrections.
In compliance with the federal FCRA, employers must provide notice to applicants before completing a background check and when taking an adverse employment action in response to a background check. Employers do not need to give the updated notice to employees that have already received the notice.
The CFPB’s final rule became effective on April 19, 2023, and the compliance deadline for starting to use the updated notice is March 20, 2024.
How:
- Update your “A Summary of Your Rights Under the Fair Credit Reporting Act” notice.
- Monitor the CFPB website for an additional updated notice with corrected typos.
Additional Resources:
A Summary of Your Rights Under the Fair Credit Reporting Act
