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.

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.

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 ...