Russell’s article, titled “The ‘Great Resignation,’ departing employees and new federal efforts to restrict noncompetes,” discusses President Biden’s order encouraging the FTC to exercise its rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” In addition, the article suggests practical steps companies should consider to protect their business interests in light of the recent Executive Order.
According to the article,
The Great Resignation is coming. Unprecedented numbers of employees are expected to change jobs, and more than half of them will take confidential company information. Worse, 40 percent of them will use that information at their new job.
Companies frequently protect their trade secrets from this type of exfiltration with narrowly tailored noncompetes that prevent employees from taking jobs in which they are likely to use their former employer’s confidential information. These agreements are an important part of an effective trade secret protection program.
However, on July 9, President Biden issued an “Executive Order on Promoting Competition in the American Economy” calling for the Federal Trade Commission to “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”
he article provides an overview of recent state and federal efforts to regulate the use of non-compete agreements. The current status of non-competition agreements is as follows:
Although states have, for the most part, been imposing various wage thresholds and notice requirements, the federal government has not yet taken action. Congress has not voted to ban noncompetes. Biden did not ban noncompetes though his executive order. And the FTC has not banned noncompetes. But they may.
The article concludes with suggestions for practical steps that companies can take now to prepare for federal regulation of noncompete agreements:
First, if you want to be heard, reach out to the FTC and Congress.
Second, review all existing restrictive covenants, whether contained in employment agreements, RSU agreements, stock option agreements, long-term incentive agreements, or other agreements.
Also, review and strengthen as appropriate all policies and codes of conduct. But be mindful of other applicable laws, including, for example, D.C.’s forthcoming prohibitions on anti-moonlighting requirements.
Third, make sure that there is a culture of confidentiality at your clients’ companies. That is not to say that all information needs to be locked down. There is always a balance. If information is locked down too tightly, work becomes less efficient and people will find workarounds, likely resulting in even less security for the information.
For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.
eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.
The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.
Russell Beck’s work in this area is well recognized, and includes:
- Over thirty working on trade secret, noncompete, and unfair competition matters
- Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
- Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (6th ed., MCLE, Inc. 2021), used by other lawyers to help them with their noncompete matters
- Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
- Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
- Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
- Founding and administering the award-winning blog, Fair Competition Law
- Establishing and administering the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,660 and 870 members, respectively, around the world
- Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm
In addition, Russell was honored for his work in this area of law in the 2020 Chambers USA Guide, which stated that Russell Beck is “an expert in the field of trade secret and restrictive covenant law,” and is also noted for his “ability to adjust and come up with successful solutions.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”
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