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Non-competes: federal government cracking down on contracts

On Behalf of | Nov 2, 2016 | Contract Disputes |

In our last post, we talked about non-competition agreements and how these contracts provide legal protection for companies in regards to trade secrets and business processes in light of an employee moving to a different company. Today, we’d like to follow up on that post by discussing a growing movement to limit or even ban non-competition agreements.

While in a certain light it is understandable why non-competes are considered controversial and anti-employee, it is also important to note that without non-competes — or an equivalent legal protection — companies would be in a very vulnerable situation when they revealed secret or important information to pertinent employees, only to watch those employees move on to another company later on.

The anti-employee argument is the basis of a big push by the federal government to ban non-competes, or at the very least reduce their efficacy greatly. Three states already ban them (California, North Dakota and Oklahoma) and now the White House is encouraging other states to get on board.

It is an interesting topic and one that will certainly spark a lot of discussion and controversy. In the meantime, we want to reiterate that it is important for companies to protect themselves and their interests. Currently, that means you can use non-competes and other legal options to ensure that your products, services and trade secrets aren’t passed around to every company under the sun.

Where this topic goes from here is anyone’s guess, but we will certainly be watching for any major developments.