A recent Society for Human Resource Management (SHRM) report explains that the Federal Trade Commission (FTC) is currently taking a targeted approach to non‑compete agreements rather than issuing a blanket national ban. According to SHRM, the FTC plans to focus on agreements that appear overly expansive or unsupported by legitimate business reasons—especially those applied to employees in lower‑paying roles. This means employers may see closer examination of whether their non‑competes are justified and responsibly limited.

As SHRM notes, the FTC has already sent warning letters to certain healthcare organizations, emphasizing that many employers could achieve their goals through less restrictive measures. Options such as nondisclosure agreements (NDAs), non‑solicitation provisions, or contracts with defined terms may provide adequate protection for confidential information and training investments without relying on broad non‑compete language. Employers that continue to use outdated or sweeping restrictions could expose themselves to increased regulatory action or legal challenges.

Recommended Next Steps

To stay ahead of these regulatory shifts, we recommend the following actions:

• Reassess: Evaluate the specific reasons and circumstances under which you use non‑compete agreements.
• Narrow Scope: Refine restrictions in terms of duration, geography, and scope to align strictly with legitimate business interests.
• Monitor State Laws: Continue tracking changes in state‑level laws, which vary significantly and often change rapidly.
• Strengthen Protections: Enhance internal practices related to confidentiality and trade‑secret management.
• Explore Alternatives: Determine if alternative restrictive covenants may offer more practical and defensible protection.

If you would like support evaluating your current agreements or determining what updates are advisable, TEG can help by reviewing risk factors and aligning your human resources approach with current legal trends.

 

 

This information does not constitute legal advice.