Ask 70 Trade Secret Lawyers and Paralegals about Noncompetes and Get One Opinion

Once again, we have resounding unanimity on the issues and recommendations to the FTC and DOJ, as they consider whether to regulate (and if so, how) noncompetes, nondisclosure agreements, and other restrictive covenants.

You may remember that on July 9, 2021, President Biden issued an “Executive Order on Promoting Competition in the American Economy” in which he “encouraged [FTC Chair Lina Khan] to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

You may also recall that, in response, I and 58 others promptly submitted a letter to the White House and FTC. See Ask 59 Trade Secret Lawyers and Paralegals About Noncompetes and Get One Opinion.

Then we waited.

Then, on November 12, the FTC posted a draft Strategic Plan for Fiscal years 2022-2026. That plan contained two express references to noncompetes and some other language that seems aligned with President Biden’s Executive Order. For more information, see The FTC’s Draft Strategic Plan: What it says about noncompetes and other restrictive covenants.

Then we waited again.

Next, on December 6 and 7, 2021, the FTC and DOJ held a virtual workshop, “Making Competition Work: Promoting Competition in Labor Markets.” During the workshop, they considered, among other things, possible regulation of noncompetes, no-poach agreements, nondisclosure agreements, and training repayment agreements, among other things. See New Vigor at the FTC and DOJ to Ban Noncompetes for a summary of the Workshop. (This was the second such workshop; the first, “Non-Competes in the Workplace: Examining Antitrust and Consumer Protection Issues,” was held in-person on January 9, 2020.)

The FTC and DOJ encouraged the submission of public comments following the workshop. The public comment period remained open until December 20, 2021.

No surprise, I submitted another letter. Actually, I, along with 69 other lawyers and paralegals, submitted another letter.

Between our two submissions, we have 73 lawyers and paralegals involved in this process.

In our new, combined submission, signatories who were not involved with the July Submission added their voice to the original submission, and supplemented it with a discussion of new research and analysis that highlights gaps in prior research and address several issues raised during the Workshop.

We see the issues from all three perspectives: employee, former employer, and new employer. And, despite the broad range of clients we help, our respective locations around the country, and the local, regional, or national scope of our respective practices, we were all in agreement about what to say in our submission. It can be summarized as follows: Federal regulation is likely inappropriate, is definitely premature, and, in any event, should be limited.

Enjoy the read.

We’ll keep you posted on any developments.