BLOG

Thoughtful Insights On The World We Live In

non-compete

Protecting Your Business in Light of the Federal Trade Commission’s Proposed Ban on Non-Competes

When you own a business, you are only as protected as your trade secrets are. That is why you should pay close attention to the Federal Trade Commission’s (FTC) recent proposal to ban non-competes in most contracts. On January 5th, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking that, if implemented, would functionally prohibit any employer in the United States from entering a non-compete clause with their workers.

For decades, non-compete agreements and provisions have been a cornerstone of business security, ensuring that employers and business owners are not subject to their trade secrets being circulated without their consent. However, in recent years the practice of entering into non-compete agreements has come under broad scrutiny, leading to conditional prohibitions of the agreements in states including Maryland and Oregon and full bans in states including California and Oklahoma.

The FTC’s newest proposal will take these limitations further by imposing them on all businesses throughout the United States. Should it go into effect, it will not only prohibit non-competes from being enacted, but it will nullify any existing agreements and require businesses to issue formal letters of rescission to all impacted employees. This applies to current and former employees who have been bound by a non-compete agreement.

Though unlikely, even if this proposal is thrown out, we recommend that businesses and employers find and utilize alternative protective measures to limit reliance on non-compete agreements. The continuing increase in scrutiny of non-compete agreements is predictive of an impending invalidation of those agreements, whether now or in the near future.

It is imperative that businesses make plans and create systems outside of non-competes for protecting company information, especially in the case of employees transitioning out of the business. Contact us today to ensure you are best equipped to protect your trade secrets and business interests.

Related

A Startup Conversation: Jim Roberts on Cultivating Entrepreneurship in Wilmington

Jim Roberts was the Founding Executive Director of the UNCW Center for Innovation and Entrepreneurship incubator and is the founder of the Network for Entrepreneurs in Wilmington (NEW) as well…

>>

Brand Protections and The Importance of A Fanciful Trademark

In the fast-paced and competitive world of business, your brand is everything. It represents your company’s identity, values, and products or services. As a law firm specializing in intellectual property…

>>

Mastering the Art of Handling Negative Online Reviews: Tips and Strategies for Business Owners

If you have been in business for any significant amount of time, you likely have received a negative online review. Depending on where the review is posted, the search engine or website may provide…

>>

Moving Customer Data Across the Atlantic Is Now A Bit Harder On The Heels Of The EU’s Meta Decision

As businesses continue to expand globally, the issue of data privacy and security becomes even more critical. As the amount of consumer digital data being collected increases, businesses should be…

>>

The “Delaware Flip” as a U.S. Capital Access Tool for International Businesses

Flip it! In our legal practice, we look for opportunities to use the law to create strategic business opportunities for our clients. One of our most high-impact structuring techniques, especially…

>>

Intellectual Property – A Roundtable Discussion

Protecting your intellectual property (IP) is essential to running a successful business. Understanding the different types of IP and how they work can ensure your ideas remain secure and utilized…

>>

THE LATEST

A Startup Conversation: Jim Roberts on Cultivating Entrepreneurship in Wilmington

Jim Roberts was the Founding Executive Director of the UNCW Center for Innovation and Entrepreneurship incubator and is the founder…

Brand Protections and The Importance of A Fanciful Trademark

In the fast-paced and competitive world of business, your brand is everything. It represents your company’s identity, values, and products…

Mastering the Art of Handling Negative Online Reviews: Tips and Strategies for Business Owners

If you have been in business for any significant amount of time, you likely have received a negative online review. Depending on where the…

Contact Us

Let's challenge the default together