By Emily Peck | Axios
Earlier this week a federal judge in Texas stopped the FTC’s ban on noncompete agreements from taking effect nationwide.
Why it matters: It’s increasingly unlikely that a national ban on noncompetes will ever happen. That doesn’t mean employers can run wild, however, locking down workers in contracts that bar them from taking jobs with rival firms.
State of play: Thanks, in part, to the increased attention the FTC drew to noncompetes, more states are passing laws limiting these agreements.
- Minnesota passed a noncompete ban last year. California, North Dakota and Oklahoma also have blanket noncompete bans.
- Plus, 33 other states have restricted their use for lower-income workers or in industries like health care.
- “There’s a lot happening at the state level. I definitely wouldn’t say to a client, if you want to do a noncompete that’s fine,” says Laura Smolowe, a partner at Munger, Tolles & Olson.
“This decision does not grant employers unrestricted authority to impose broad non-compete agreements. Employers must still carefully consider state law limitations, as many states continue to regulate and, in some cases, restrict or prohibit the use of non-compete clauses.“
-Shruti Gurudanti, Rose Law group partner and director of corporate transactions, highlights why the future of the noncompete ban isn’t totally bleak
