Non-compete agreements became increasingly big news in the US in 2023 and continue in 2024. Many states and the US federal government (including the FTC and NLRB) are taking hostile views against this age-old practice.
Non-compete agreements limit the ability of departing workers to go to a competing company. The agreements vary widely in coverage. Some define competing companies very broadly, and some have a specific list of companies. Some have short time periods, and some can be very long or indefinite. Some define specific roles at competing companies, while some are so broad you could prevent a top scientist from being a floor sweeper or receptionist at a competing company. Even geography varies – some are limited to a local area, while others are national or global.
Companies have long used non-compete agreements as an indirect way of protecting trade secrets. If an employee could not work for a competitor, they can’t easily disclose trade secrets.
With non-competes coming under attack, and being prohibited in California, Minnesota, North Dakota, and Oklahoma, companies are being forced to rely on state and federal trade secret statutes such as the UTSA and DTSA to protect their valuable confidential information.
Non-competes in 2024 will continue to be eroded, or at least employers will be forced to dramatically narrow the scope and duration of them.
This is a good thing for those of us in the trade secret world!