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By: Amy C. Bender
In an effort to protect valuable customers, confidential and proprietary information, and investment in personnel, employers often require noncompete agreements that limit an individual’s ability to engage in competing services during and after employment. There is no national standard governing noncompete agreements; rather, each state has its own laws on the extent to which such agreements may be used or enforced.
Recently, some states have narrowed the circumstances in which these agreements may be used. For example, some jurisdictions now limit the category of employees who lawfully may be subject to a noncompete agreement (such as only managers and sales employees). Washington, D.C. has just become the latest U.S. jurisdiction to ban noncompete agreements altogether (except in extremely limited circumstances, such as in connection with the sale of a business), joining California, North Dakota, and Oklahoma. With the increasingly remote workforce (particularly due to the COVID-19 pandemic), employers seeking to protect their confidential information and human resource investments must review the laws not only of the states where they operate, but also those of the states where their employees are located.
Even in states where noncompete agreements are limited or prohibited, employers typically have other avenues to protect their legitimate business interests, such as bans on workers using or disclosing confidential information and soliciting the employer’s customers or employees. Employers should consider implementing these measures in addition to, or instead of (if needed), noncompete agreements.
FMG’s Labor and Employment Law team can assist your organization with drafting or enforcing a noncompete agreement, evaluating whether your potential new hire’s agreement is enforceable, and discussing other protective measures. For more information, contact Amy Bender at [email protected].