Tag Archives: restrictive covenants

Over 50 percent of employees admit stealing company information when they leave for a new job. It’s this “insider threat” that keeps us up at night. To help combat it, we have updated and reissued our training, Protecting Trade Secrets While Working From Home, with improved audio and additional substance.
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. 70 lawyers who practice extensively in the area of trade secret and restrictive covenant law agree: federal regulation is likely inappropriate, definitely premature, and, in any event, should be limited.
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.
A recent paper, “The Ethics of Noncompete Clauses,” by University of Georgia Professor Harrison Frye, expands the policy discussion around noncompetes, and argues for a more thoughtful analysis. As Professor Frye details, seeing noncompetes “as solely advancing the interests of employers is myopic.”
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