The Federal Trade Commission voted today to adopt a rule banning noncompetes. Summarized below are what the Rule requires, when it takes effect, and what you need to do. But first, I note that, while doing away with noncompetes may be a good thing philosophically, the Rule represents as enormous a step backward for the protection of trade secrets as the Defend Trade Secrets Act was a step forward.1 That said, there’s a lot that can happen between now and when the Rule takes effect. So, in the immortal words of Kevin Bacon, “Remain calm. All is well… All is well!” What the Rule requires:  ..read more

The US Chamber of Commerce held a press conference today about the FTC’s up-coming announcement and vote on the final noncompete rule. I am very appreciative that the Chamber permitted me to attend the press conference! As expected, the Chamber is planning to file a lawsuit challenging the FTC’s rule. The surprise was that the Chamber is planning to file on Wednesday. Here’s a very quick recap: Shira Rawlinson, Vice President, Communications for the Chamber, kicked off the meeting. Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy for the Chamber bega ..read more

Well, if you were by your email at 2:31 PM ET today (I was not), you may have received the following email from the FTC stating, “Today, Federal Trade Commission Chair Lina M. Khan announced that a special Open Commission Meeting will be held virtually on Tuesday, April 23, 2024, at 2pm ET.” The email also provided this link — FTC Announces Special Open Commission Meeting on Rule to Ban Noncompetes — with the following agenda: Rule to Ban Noncompetes Clauses: The Commission will vote on whether to issue a proposed final rule that would prevent most employers from enforcing noncompetes against ..read more

On March 10, I posted an update on the outstanding legislation: 70 noncompete bills in 31 states, 6 in Congress… and suggested keeping an eye on the noncompete bills in Illinois, Maine, and Washington. Things moved fast; the legislative process in Maine and Washington is already complete. In the weeks since that post, first, Washington’s noncompete bill passed (and will become effective on June 6, 2024), and Maine’s noncompete bill changed fundamentally, was passed by both houses of the legislature, and was then sent to the Governor in its original form (odd, yes), who vetoed it. Summaries are ..read more

Click image for the iconic fish toss at Pike Place Market. On March 13, Washington passed legislation that will make it harder to enforce noncompetes, nonsolicitation agreements, and no-service agreements. The new law takes effect on June 6, 2024. Background You may recall that in 2019, Washington passed a law completely overhauling its then-existing noncompete law. The new law mandated advance notice that a noncompete would be a requirement, required “independent consideration” for a noncompete entered post-commencement of employment, established minimum earnings thresholds for the use of a n ..read more

As of March 9, there are 69 noncompete bills pending in 31 states, plus 6 in Congress. (As a reminder for comparison, there had been a total of 98 noncompete bills in 33 states last year.) Executive summary  This year’s bills range from complete noncompete bans (9 bills in 7 states plus NYC and 2 in Congress) to some type of wage/job criteria/threshold (7 bills in 6 states plus NYC and 1 in Congress) to bans for veterinarians (4 bills in 3 states) to regulations in the healthcare industry (27 bills in 18 states and 2 in Congress), and 13 of the bills (in 8 states plus NYC) include some ty ..read more

The FTC will soon (next month, we think1) be issuing its long-awaited rule on the use of noncompetes. Most people tracking the progress (me included) expect that the final rule will closely resemble the near-total ban on noncompetes that the FTC proposed last January (2023). In that regard, the FTC has recently been sending signals suggesting that it has not changed its plan — or at least not materially. In that regard, as you may recall, on November 28, 2023, the FTC sent a letter to New York’s Governor Kathy Hochul urging the governor to sign a bill banning all noncompetes in New York. As I ..read more

New 50-state noncompete chart updated for 2024 We just updated our 50-State Noncompete Chart again. This update does the following: covers recent developments; adds the penalties and fines in the seven states with them (California, Colorado, Illinois, Maine, Nevada, Virginia, Washington), in the two states where there is an argument for them (Oregon and Wisconsin),1 and Washington, D.C.; updates the wage thresholds for use of noncompetes, including impact on in-term noncompetes (anti-moonlighting provisions); and adds additional details for various states. Our chart — which was the ..read more

We finally have all the information necessary to update all of the minimum compensation thresholds that must be satisfied before an employee can be subject to a noncompete and other restrictive covenants in 2024. As a reminder eleven states and Washington, D.C. have adopted such minimum compensation thresholds or other criteria. In order of effective date, they are: Oregon (2008; updated 2022), Illinois (2016; updated 2022), Massachusetts (2018), Maine (2019), Maryland (2019; updated 2023), New Hampshire (2019), Rhode Island (2020), Virginia, (2020), Washington (2020), Nevada (2021), Colorado ..read more

Companies frequently ask whether they should review a job candidate’s noncompete and other restrictive covenants. The answer is yes. (If you agree, you can stop here.) Sticking your head in the sand and ignoring a job candidate’s obligations does not make them go away. Worse, willful ignorance can exacerbate the situation. Quite simply, if someone takes a job in violation of contractual obligations, the former employer will be more likely to enforce its rights, the employee will face the prospect of litigation and being put out of work, the hiring company will also face the prospect of litigat ..read more