Restrictions on Noncompetes: New FTC Regs on Wage and Hour Workers

Enforceability of Recent Executive Order to Promote Competition

A live 90-minute CLE video webinar with interactive Q&A


Thursday, October 14, 2021

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE course will advise employment counsel on the executive order that President Biden signed regarding noncompete agreements. The Federal Trade Commission (FTC) has recently released regulations to curtail the use of noncompete clauses and other clauses or agreements that may limit worker mobility. The panel will discuss the FTC's regulations and the state law trend of disfavoring restrictions on employee mobility such as noncompete agreements.

Description

Noncompete agreements and restrictions in employment have endured some significant pushback as of late. A prominent example involved Jimmy John's and its egregious attempt to restrict its sandwich makers and other low-wage earners. Jimmy John's is one of the most well-known examples of noncompete overuse, but it's by no means the only example.

On July 9, 2021, President Biden signed the sweeping Executive Order on Promoting Competition in the American Economy, which, among other initiatives, "encouraged" the FTC to use its statutory rulemaking authority "to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility." While efforts to curtail the use of noncompetes are not new, this latest executive action could signal increased momentum towards nationwide restrictions banning or restricting the use of noncompetes for workers in a wide range of industries. The White House's explanatory fact sheet clarifies that "the President encourages the FTC to ban or limit non-compete agreements." A nationwide rule regarding noncompetes would be an unprecedented move by the federal government.

Previously, the regulation of noncompete agreements has been left to the states, many--including Illinois, Nevada, and Oregon--have passed legislation limiting the enforcement of noncompetes by setting minimum compensation levels and time limits on the period of restriction. The Executive Order and accompanying fact sheet do not offer any details on whether these are the types of limitations the FTC should consider. Still, they represent common compromises that are short of an outright ban on noncompetes. In addition to President Biden’s Executive Order, the Illinois legislature recently passed new noncompete legislation in late May 2021. The new law will have significant changes for agreements and litigation in Illinois.

Although the FTC's administrative rulemaking process regarding noncompete agreements may take a year, if not longer, to come to fruition, employers should immediately consider reviewing their workers' noncompete agreements and employment policies for compliance with state law and with consideration of future possible federal action limiting the enforceability of such agreements.

Listen as our expert panel guides employment counsel on state and federal law related to noncompete enforcement as the rules evolve. What steps should counsel advise at this time for employers seeking to protect their businesses?

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Outline

  1. History of noncompete enforcement
  2. Biden executive order
  3. FTC possible regulations
  4. Future of noncompete beyond wage and hour workers
  5. Best practices for employers in the future seeking to limit competition/protect business

Benefits

The panel will review these and other critical issues:

  • What does the Promoting Competition in the American Economy Executive Order accomplish?
  • What has the FTC stated or implied regarding its proposed rulemaking?
  • How have states handled restrictions on noncompetes?
  • How can counsel best address the likely limitations on using noncompetes when developing employment policies in the future?

Faculty

Beck, Russell
Russell Beck

Partner
Beck Reed Riden

Mr. Beck is a business, trade secrets, and employee mobility litigator, nationally recognized for his trade secrets and...  |  Read More

Bindra, Amit
Amit S. Bindra

Partner
The Prinz Law Firm

Mr. Bindra focuses his practice on employment and executive agreements, noncompete, non-solicit and trade secret...  |  Read More

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