Federal Non-Compete Legislation Update

Along with 54 other lawyers and two paralegals from across the country, Seyfarth partners Kate Perrelli, Robert Milligan, and Erik Weibust recently signed a letter, penned by our friend Russell Beck, in response to President Biden’s July 9, 2021 Executive Order on Promoting Competition in the American Economy, which we previously wrote

On Friday, July 9, 2021, the Biden Administration released its executive order on “Promoting Competition in the American Economy.” We previously wrote about the forthcoming order and predicted that the executive order’s treatment of non-compete provisions would be a general call to rulemaking versus a more authoritative or immediate directive to the FTC.
Continue Reading President Biden Issues Executive Order Encouraging the FTC to Consider Curtailing the Use of “Unfair” Non-Competes, but Without Providing any Additional Guidance or Details

The Biden Administration plans to issue an executive order calling on the Federal Trade Commission (FTC) to adopt rules to limit the use of noncompete clauses in employment agreements. According to Axios, White House Press Secretary Jen Psaki told reporters that “roughly half of private sector businesses require at least some employees to enter noncompete agreements, affecting over 30 million people. This affects construction workers, hotel workers, many blue-collar jobs, not just high-level executives. [President Biden] believes that if someone offers you a better job, you should be able to take it. It makes sense.” Indeed, in 2016, then Vice President Biden went on the record that “no one should have to sit on the sidelines because of an unnecessary non-compete agreement.” While the intervening years have not seen any federal action on non-competes, a number of states have enacted legislative changes to narrow the scope and availability of noncompete agreements.
Continue Reading Biden to Ban Non-Competes?

2020 brought with it a bevy of new challenges for companies of all sizes in every industry, not the least of which was protecting trade secrets and confidential information in the face of newly remote workforces. 2021 brings with it new hope and the promise of a return to “normalcy”—whatever that may mean in this changed world. But companies must remain vigilant about protecting their trade secrets and confidential information. As we enter the new year, here are ten resolutions that companies should make—and keep—to accomplish that important goal in 2021 and beyond.
Continue Reading Ten Trade Secret Resolutions to Keep for 2021 and Beyond

As we previously reported, President-elect Biden has issued a “Plan for Strengthening Worker Organizing, Collective Bargaining, and Unions” on his website, and it includes a statement that his incoming administration purportedly plans to “work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a

President-elect Joe Biden has issued a “Plan for Strengthening Worker Organizing, Collective Bargaining, and Unions” on his website, and it includes an interesting statement about what his incoming administration purportedly intends to do about non-compete and no-poach agreements:
Continue Reading Will Biden Ban Non-Competes?

Dawn Mertineit and Robert Milligan authored an article in the Daily Journal, “‘Can’t we just be like California?’ Another solution in search of a problem.” The Seyfarth partners said while historically the issue of noncompete enforcement has been left to the states, the last year has seen the U.S. Department of Justice and the

On April 13, 2020, the Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition released a joint statement and press release regarding “competition in labor markets” and potential agency actions in the face of the COVID-19 crisis. While the agencies’ joint statement appears to be focused on collusion between employers entering into horizontal “no-hire” or “no-poach” agreements, employers in certain industries affected by the crisis should also exercise reasonable care in enforcing vertical restrictive covenants, including non-competition and non-solicitation agreements.
Continue Reading The DOJ and FTC Issue Joint Statement on Competition in Labor Markets in Light of COVID-19: What Effect, If Any, Does This Have on Non-Competes?

Within the last five months, the two executive arms responsible for enforcing antitrust laws—the US Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”)—held public workshops to examine the effect of non-compete clauses in employment contracts on the labor market. The DOJ held its workshop on September 23, 2019, while the FTC recently held its own at the top of the year, on January 9, 2020. The purpose of the FTC workshop was “to examine whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts.”

Why the FTC now wants to regulate in the employment space is not readily apparent apart from attempting to capitalize on a low-hanging fruit populist issue concerning the overreporting of some companies allegedly using non-competes with low-wage workers.
Continue Reading A Solution in Search of a Problem? FTC Hosts Workshop to Consider Authority to Abolish Non-Competes

As we previously covered, a group of 18 state attorneys general in July filed comments with the Federal Trade Commission (“FTC”), asking the FTC to incorporate labor concerns when reviewing corporate mergers and to use its enforcement powers under the Sherman Act to stop the use of non-compete, non-solicit, and no-poach agreements in many situations. Many of those same attorneys general recently sent another letter to the FTC, this time urging it to use its rulemaking authority “to bring an end to the abusive use of non-compete clauses in employment contracts.”

In the most recent letter, the attorneys general endorsed the arguments presented in a March 20, 2019, petition submitted to the FTC by various labor unions, public interest groups, and legal advocates, requesting that the FTC initiate rulemaking to classify abusive worker non-compete clauses as an unfair method of competition and per se illegal under the FTC Act for low wage workers or where the clause is not explicitly negotiated. As they did in their previous letter, the attorneys general contend that non-competes “deprive workers of the right to pursue their ambitions and can lock them into hostile or unsafe working environments.” The attorneys general also argue that the arguments in support of non-compete clauses are unpersuasive and that employers can use other “less draconian” ways to recoup their investment in job training, methods of business, and other intangibles. The attorneys general further argued that non-competes burden businesses seeking to hire new employees, which in turn inhibits innovation and drives up consumer costs by suppressing competition.
Continue Reading State Attorneys General Keep Pressure on FTC to Regulate Non-Competes