Eighth Circuit Demonstrates Exception to FTC’s Ban on Non-Compete Clauses in Employment Contracts
June 27, 2024
On April 23rd, 2024, the Federal Trade Commission (FTC) issued a final rule banning employers from using post-employment non-compete clauses with employees, except in limited circumstances. One of those circumstances is when the employee is a senior executive in a policy-making position and made at least $151,164 in the preceding year. On June 5th, 2024, the US Court of Appeals for the Eighth Circuit issued an opinion demonstrating this exception.
In January of 2023, Cigna sued CVS and Amy Bricker, alleging that Bricker, former head of Cigna’s Express Scripts unit, violated a non-compete agreement by joining CVS as its chief product officer. Cigna claimed the non-compete agreement with Bricker was valid because she was among a small group of senior executives still bound by such agreements. Bricker had also received substantial bonuses and stock grants tied to these non-compete agreements and had access to Cigna’s trade secrets.
Cigna obtained temporary and preliminary injunctions to prevent Bricker from starting her new role at CVS. The Eighth Circuit upheld the preliminary injunction, finding that Cigna demonstrated a likelihood of irreparable harm if Bricker disclosed trade secrets or joined a direct competitor like CVS.
The Eighth Circuit’s decision illustrates a scenario where the FTC’s new ban on non-compete clauses does not directly apply. Bricker’s senior executive status at Cigna, along with her substantial stock options valued at $1,555,879, positioned her under the FTC’s exemption criteria, allowing the court to uphold her non-compete agreement.
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