ArticleWhile a late summer decision by a U.S. District Court set aside the FTC’s total ban on non-competes, employers must still carefully consider whether or not to require employees to sign a non-compete as a condition to employment. Employers should bear in mind that state law may restrict its ability to require and/or enforce a non-compete. In addition, state law may limit the classes of employees from whom an employer may require a non-compete.
Employers should seek advice from counsel in order to carefully craft a non-compete that will both protect the legitimate business interests of the employer and survive any challenges to its enforceability. Depending on where an employee resides, a non-compete remains as a powerful tool which employers may use to protect its interests after an employee’s separation from employment.
Careful consideration and planning are essential in order to ensure that non-competes will be enforceable against a particular employee. We often counsel employers on the advisability and scope of non-competes. Strategic counsel can help you determine whether a non-compete makes sense for your business.
In light of the decision in Ryan v. Federal Trade Commission, for now employers need not worry about compliance with the Noncompete Rule, which would have required employers to notify millions of workers that their noncompete agreements were unenforceable. However, employers should continue to be mindful of potential government enforcement actions and compliance with state law.
