Knight Swift Transportation Holdings’ noncompete for former CEO and President David Jackson temporarily restricts him from industry and director positions.
The executive and trucking company parted ways Feb. 26 and soon signed a deal involving $5.5 million in payouts to Jackson. Participating in the deal temporarily prevents him from working for acquisition targets, serving on Knight-Swift competitors’ boards, and competing with the carrier.
A severance agreement signed March 8 includes several restrictions lasting up to 18 months and two years, according to a securities filing from May 1. But Knight-Swift can override the noncompete provision if it chooses to do so.
Such deals may soon be remnants of the past if a Federal Trade Commission rule goes into effect Sept. 4 and survives legal challenges. The FTC rule is slated to roll back some noncompetes across the country, but existing agreements with senior executives would remain intact.
But once the rules goes into force, companies could no longer make such deals, even with senior executives, according to the FTC.
“Existing noncompetes for senior executives — who represent less than 0.75% of workers — can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes,” the FTC said last month.
Exemptions abound. The rule gives room for noncompete agreements for nonprofit workers, franchisees and individuals selling their businesses, according to a summary by the Tampa, Florida-headquartered law firm Holland & Knight.
Despite the pending change, business groups led by the U.S. Chamber of Commerce are seeking to invalidate the rule through a lawsuit filed in April.
“Since its inception over 100 years ago, the FTC has never been granted the constitutional and statutory authority to write its own competition rules,” Chamber President and CEO Suzanne Clark said in an April statement about the case. “Noncompete agreements are either upheld or dismissed under well-established state laws governing their use.”
That case is on hold while a similar case proceeds involving the tax services firm Ryan, LLC.
