As featured in #WorkforceWednesday: This week, we look at the restriction and legislation of non-compete agreements.
The Future of Non-Compete Agreements
The restriction and legislation of non-compete agreements is gaining traction around the country, with states and the federal government passing or proposing new restrictions on the clauses. In July, President Biden signed an executive order that discussed the regulation of non-compete agreements, which in the past has only been the province of the states. Attorneys Pete Steinmeyer and Brian Spang discuss how the executive order impacts employers, changes to expect, and how to best prepare for the future.
More on Biden’s Executive Order on Non-Compete Agreements
On July 9, 2021, President Biden signed the Executive Order on Promoting Competition in the American Economy, which encourages the Federal Trade Commission (“FTC”) to employ its statutory rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” Executive Order, Section 5(g). While the language in this executive order refers to the “unfair” use of non-compete clauses, the Biden administration’s explanatory statement makes clear that “the President encourages the FTC to ban or limit non-compete agreements” altogether. Read more about this executive order.
How Jurisdictions Are Taking Action
Just as employers in the District of Columbia begin navigating the District’s recently enacted non-compete ban, changes to the law are already in the works. As we previously reported, earlier this year, the District enacted the Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Act 23-563) (“Act”), which prohibits employers from requiring or requesting that an employee sign any agreement containing a non-compete provision. For a more detailed summary and analysis of the Act, please refer to our December 22, 2020, article.
Governor Steve Sisolak recently signed Assembly Bill 47, which amends Nevada’s statute governing non-compete agreements (Nevada Revised Statutes 613.195). Employers should be aware of several changes to the law, which will go into effect on October 1, 2021. For more on this amendment, click here.
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