Trade Secrets & Employee Mobility

This is the final installment of our three-part series discussing employers’ most frequently asked questions in response to the Federal Trade Commission’s (FTC) Final Noncompete Rule (the “Noncompete Rule”).

As reported in Part 2, there are continued attempts at both the federal and state level to ban or restrict the use of noncompetes.  As a result of this ongoing attack on noncompetes, employers have asked a third – and most important – question: “In light of the Noncompete Rule and push by many states to restrict the use of noncompetes, what should we be doing now to best protect our business interests?”

The answer to this often-asked question is to ensure that the company’s trade secret and confidential information is protected to the fullest extent possible through the use of a Trade Secret Assessment, or as we have referred to it: a “Trade Secret Tune-Up."

This is the second installment of our three-part blog series that is intended to respond to employers’ three most frequently asked questions in response to the Federal Trade Commission’s (FTC) Final Noncompete Rule (the “Noncompete Rule”). Part 1 addressed whether employers can seek to enforce their noncompetes pending the anticipated effective date of the Noncompete Rule. 

A second frequently asked question is: “Can we continue to enter into noncompetes with newly hired, or existing, employees?”  The short answer is “yes”, but employers should be aware of some pitfalls.

On Spilling Secrets, our podcast series on the future of non-compete and trade secrets law, we underscore the importance of e-discovery in trade secret and restrictive covenant cases and look at how employers can use electronically stored information (ESI) to protect proprietary information:

There’s a common misperception that ESI just means emails, but it’s much more than that. ESI encompasses anything in digital or electronic form. The departure of an employee is at the root of most trade secret and restrictive covenant litigation. Therefore, when an employee departs, the timely preservation of ESI must be a standard operating procedure.

In this episode of Spilling Secrets, Epstein Becker Green attorneys A. Millie Warner and Elizabeth S. Torkelsen and special guest James Vaughn, Managing Director of iDiscovery Solutions, discuss the complicated field of digital forensics and how employers can effectively manage ESI.

This three-part blog series is intended to identify and respond to three of the most frequently posed questions by employers in response to the Federal Trade Commission’s (FTC) Final Noncompete Rule (the “Noncompete Rule”).

We previously reported on the Federal Trade Commission’s (FTC) Noncompete Rule and the currently pending litigation challenging the Noncompete Rule.  In one of those cases, which was brought in the United States District Court for the Northern District of Texas and consolidated with the lawsuit filed by the United States Chamber of Commerce, the plaintiffs filed a Motion for Stay and Preliminary Injunction. The court has indicated that it intends to rule on that motion by July 3, 2024.

When the calendar turns to July 2024, staffing agencies, home health agencies and other service providers operating in Minnesota are going to experience a considerable change in the legal landscape of that state, which could affect their motivation to continue doing business there. 

On July 1, 2024, a new Minnesota law (MN SF 3852) goes into effect, prohibiting any service provider (defined as a business “acting directly or indirectly as an employer or manager for work contracted or requested by a customer”), from restricting, restraining or prohibiting in any way that customer from directly or indirectly soliciting or hiring an employee of the service provider.  

As we have previously written, on April 23, 2024, the Federal Trade Commission (FTC) issued a sweeping final rule (“the Rule”) that purports to ban virtually all post-employment noncompete agreements in the United States. The Rule was formally published in the Federal Register on May 7, 2024, and will go into effect 120 days later, on September 4, 2024--if it survives the legal challenges that were filed in quick response.

While justice may not always be swift, the news about the Rule and challenges to it have developed at breakneck speed by many litigators’ standards over the ...

Now on Spilling Secrets, our podcast series on the future of non-compete and trade secrets law: On April 23, 2024, the FTC announced its final rule banning virtually all non-compete agreements nationwide. Employers across the nation are looking for answers.

In this episode of Spilling Secrets, Epstein Becker Green attorneys Peter A. Steinmeyer and Erik W. Weibust lay out the details of the ban, the legal challenges already underway,* and the actions employers should be taking.

*EBG is representing amici in one legal challenge: the U.S. Chamber of Commerce litigation.

Our colleagues Peter Steinmeyer and Erik Weibust at Epstein Becker Green co-authored an article in Thomson Reuters Practical Law, titled “Expert Q&A on the FTC's Final Rule Banning Post-Employment Non-Competes.”

Following is an excerpt (see below to download the full version in PDF format):

On April 24, 2024, the Federal Trade Commission (FTC) announced the issuance of a final rule banning employers from entering into, enforcing, or attempting to enforce post-employment non-compete clauses with workers, subject to limited exceptions, and invalidating all ...

We recently reported on the Federal Trade Commission’s (FTC) 3-2 vote to issue its final noncompete rule that, unless it is enjoined, would ban all new noncompetes and a majority of existing noncompetes (the Noncompete Rule).  As expected, within hours of the FTC’s vote on the final noncompete rule, Ryan, LLC, a leading global tax services and software provider, filed a lawsuit challenging the Noncompete Rule, and shortly thereafter the Chamber of Commerce of the United States of America (the U.S. Chamber) followed suit, filing its own lawsuit seeking to vacate and set aside the ...

As expected, the Federal Trade Commission (FTC) voted 3-2 yesterday to issue its final noncompete rule, with only a few changes from the proposed rule that are discussed below. Unless it is enjoined, which we expect, the rule will become effective 120 days after publication of the final version in the Federal Register.

If the final rule survives the legal challenges, which are likely to make it all the way to the United States Supreme Court, all new non-competes would be banned. Except for existing non-competes for senior executives (as defined below), all existing noncompetes with ...