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Non-compete agreements may soon be going the way of the dodo. The FTC just concluded its public comment period for its plan to eliminate them in most cases, and new rules are expected to be released later this year.
Already, though, many states have restricted these agreements. In this podcast, and in his article in Compliance & Ethics Professional, John Gardiner of Bodman explains that the new FTC rule was designed to counter agreements that many felt were overly broad and restricted the ability of employees to find gainful employment elsewhere. The agreements also raised antitrust concerns since they could stifle competition; the FTC saw behavior among employers that appeared to them to keep employees from finding work elsewhere.
The new rule could change that, greatly narrowing when a non-compete agreement could be enforced. It also means that non-disparagement and non-disclosure agreements that could have the same chilling effect on employment changes will likely fall on the wrong side of the line.
So, assuming the rule goes into effect, what should compliance teams do? First, dust off existing agreements to determine how they measure up against the new rule and existing state laws. Second, be on the lookout for non-solicitation agreements and provisions requiring employees to reimburse their employer for training should they switch jobs. Third, make sure that the businesspeople understand what is and isn’t permissible.
Finally, remember that this may be a moving target, especially if the courts start weighing in.
Listen in to learn more about the changing and eroding ground under non-compete agreements.