At the start of 2023, the Federal Trade Commission (FTC) proposed a new rule that would ban noncompete clauses, claiming the clauses lower wages and “harm competition.” The proposed ban would not only bar noncompete clauses moving forward but also nullify any noncompete clauses that are currently in effect. Businesses use noncompete clauses for a plethora of reasons, including limiting competition and protecting their own trade secrets and best practices. Fortunately, if the government bans these clauses across the board, there are other ways to limit competition and protect your business from departing employees. To eliminate or reduce competition and ensure vital company information doesn’t walk out the door with departing employees, you should leverage the power of confidentiality agreements and restrictive covenants. Confidentiality agreements expose former employees to significant liability should they take covered information or practices to their new employers. You should immediately consider adopting confidentiality agreements (if you have not already done so) as they pertain to some or all of the following company details: PROTECT COMPANY INFORMATION THROUGH CONFIDENTIALITY 2 Steps to Limit Competition Without Them The Government May Ban Noncompete Clauses!
Did You Know?
The Veterans History Project preserves thousands of veterans’ stories. Since 2000, the Veterans History Project (VHP) has collected videos, audio recordings, letters, diary entries, and more that chronicle the service of American veterans. These stories are safely stored at the Library of Congress and date back to World War I! Like our firm’s Legacy Interviews, VHP’s oral histories capture perspectives that would otherwise have been forgotten. When a veteran sits down with a VHP representative for a video or audio interview, the recording preserves their perspective, experience, and legacy for the next generation. VHP was the brainchild of Wisconsin Representative Ron Kind, who was inspired after overhearing his father and uncle telling tales of their service in World War II and the Korean War. He snatched up a video camera and hit record — right in the middle of a Father’s Day picnic! According to the Library of Congress, “This brief experience was the impetus for Congress to create a national, grassroots oral history initiative, which would allow participants to interview veterans in their lives and communities.” You can listen to these interviews today. Visit LOC.gov/ programs/veterans-history-project to explore the collection. You can learn about the service of Air Force Staff Sergeant Jamie Fox (Afghan War), Army Captain Albert Hassenzahl (WWII), and more inspiring veterans in their own words!
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Internal processes
Customer lists
• Financial information (both internal and external) • Marketing techniques • Employee or customer data In addition to creating strict and specific confidentiality agreements, consider marking any confidential information as such to avoid any confusion. EVALUATE EMPLOYEE COMPENSATION AND BENEFITS PACKAGES FTC officials believe a noncompete clause “suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses” and believe the new change would increase overall wages by nearly $300 billion per year. This exposes a potential bidding war to come for companies hoping to poach hardworking employees from competing companies and industries. This will make employee retention even more of a priority. To ensure you keep your employees, reevaluate your compensation packages for employees and executives to ensure the sudden dissolution of standing noncompete clauses does not disrupt your place in the market. Noncompete clauses may soon be eliminated, but with help from an experienced attorney, your business can still make use of other avenues to protect itself from unfair competition. Contact us today to make sure your business is legally equipped to handle these potential changes.
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