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By: Sean Riley
While 2021 brought major changes to the workplace with respect to mask and vaccination mandates, recent actions taken by federal and state legislatures suggest that even more changes are coming in 2022, one of which pertains to the enforceability of noncompete agreements and other restrictive covenants.
In July 2021, President Biden issued an executive order encouraging the FTC to curtail the unfair use of noncompete agreements. To date, the FTC has not issued any new regulations in that regard, though it did recently release its draft Strategic Plan for Fiscal Years 2022-2026 in which it listed “increase use of provisions to improve worker mobility including restricting the use of non-compete provisions” as a goal.
While substantive Federal action remains pending, a number of states have taken matters into their own hands, promulgating new laws that significantly restrict the use of noncompete agreements:
As new legislation is enacted, employers should evaluate whether and to what extent their non-competition and non-solicitation agreements are enforceable in the jurisdictions in which they operate and whether they have taken appropriate steps in jurisdictions with minimum earnings thresholds, particularly those in which thresholds are adjusted annually such as Maine, Rhode Island and the State of Washington, which took effect on January 1, 2022 or will take effect in early 2022.
For more information, please contact an FMG Employment attorney.