On May 5 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.
As the White House explains, “[t]o address issues that limit competition in the marketplace, the President has instructed executive departments and agencies to propose new ways of promoting competition and providing consumers and workers with information they need to make informed choices, in an effort to improve competitive markets and empower consumers’ and workers’ voices across the country.”
The White House summarizes some of the effects of noncompete agreements as follows:
The main economically and societally beneficial uses of non-competes are to protect trade secrets, which can promote innovation, and to incentivize employers to invest in worker training because of reduced probability of exit from the firm.
However, evidence indicates that non-competes are also being used in instances where the benefit is likely to be low (e.g., where workers report they do not have trade secrets), but the cost is still high to the worker.
The White House cites Beck Reed Riden LLP’s research, which was previously featured in the Wall Street Journal, as follows:
A 2013 study commissioned by the Wall Street Journal signals either a rise in the prevalence of non-competes, or significant growth in their enforcement. The law firm Beck Reed Riden LLP found a 61 percent rise from 2002 to 2013 in the number of employees getting sued by former companies for breach of non-compete agreements.
The White House brief also cites the recently issued report from the United States Department of the Treasury entitled, “Non-compete Contracts: Economic Effects and Policy Implications,” which also relied in part on Beck Reed Riden LLP’s research on nocompete agreements.
The White House report concludes that state legislatures will continue play a significant role in the use and enforcement of noncompete agreements, and indicates that President Obama’s Administration will be focusing its attention on such agreements as follows:
In some cases, non-compete agreements can play an important role in protecting businesses and promoting innovation. They can also encourage employers to invest in training for their employees. However, as detailed in this report, non-competes can impose substantial costs on workers, consumers, and the economy more generally. This report informs future discussions and potential recommendations for reform by providing an overview of the research on the prevalence of non-competes, evidence of their effects, and examples of actions states are taking to limit the use and enforcement of unnecessary non-competes.
There is more work to be done. The Administration will identify key areas where implementation and enforcement of non-competes may present issues, examine promising practices in states, and identify the best approaches for policy reform.
The White House’s press release on today’s report was penned by Ryan Burke, a Senior Policy Advisor in the National Economic Council. A full copy of the White House non-compete agreement brief can be downloaded here.
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.
Russell Beck’s work in this area is well recognized, and includes:
- Over twenty five years of working on trade secret, noncompete, and unfair competition matters
- Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), 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 administrating the award-winning blog, Fair Competition Law
- Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members 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 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”
Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.