In keeping with a campaign promise, President Biden signed an Executive Order containing 72 initiatives, which, among other things, seeks to limit use of non-compete agreements by private employers. According to the White House, non-compete agreements are used by “roughly half of private-sector businesses” and affect “some 36 and 60 million workers.” Based on the premise that non-compete agreements are “some of the most pressing competition problems across our economy,” the Executive Order seeks to have the Federal Trade Commission (FTC) “ban or limit non-compete agreements.”
Assuming that the FTC commences the rule-making processes and implements rules banning or limiting non-compete agreements, such actions will significantly impact employers. Employers regularly utilize post-employment restrictions (e.g., non-competition, non-solicitation of customers, non-solicitation of employees, non-disclosure, etc.) in an effort to secure, among other things, confidential information, goodwill, key company clients, and company assets. But, perhaps most important, employers utilize such restrictions in an effort to prevent unfair competition from ex-employees. Undoubtedly, any ban or limitation on employers’ use of such restrictions will greatly hamper their ability to protect and safeguard such vital assets and interests.
The employment team at Conway, Olejniczak, & Jerry S.C. will continue to monitor any developments related to the latest Executive Order and any subsequent actions taken by the FTC.