The FTC and DOJ contend that no-poach/no-hire covenants in (old) McDonald’s franchise agreements constitute an antitrust violation.
While most people reading this blog will know that California has a statute that bans noncompetes, it may come as a surprise that employers have dealt with that prohibition by turning to trade secret law for protection as far back as 1913 — even for low-level employees.
Contracts containing restrictive covenants (noncompetes, nonsolicitation agreements, and the like) have been the province of state regulation for over 200 years. However, starting in 2015, the federal government has been stepping into the breach through proposed legislation (most recently two bills to ban all employee noncompetes and one to amend the FLSA to ban noncompetes for nonexempt workers), FTC review (starting with a workshop in January 2020), and an Executive Order (on July 9, 2021) “encouraging” the FTC to “curtail the unfair use of non-compete clauses . . . .” While that’s not news, what is news is that earlier this week (September 14, 2021), the FTC issued a public statement that — if it is as broad as it appears — seems to presume that the FTC has authority to regulate these types of contracts.
Ask two lawyers for their opinion, and you’ll get three opinions. But I asked 21 lawyers and a paralegal and got only one opinion. That opinion that is set out in a letter we collectively submitte...