The Federal Trade Commission’s proposed ban on noncompete agreements, along with similar proposed state-level bans, has significant implications for how companies manage trade secret protection. As Rob Jensen from Wolf Greenfield articulates, these changes necessitate an essential reassessment and reinvigoration of approaches to trade secret protection.
In light of these potential noncompete agreement bans, companies would do well to reassess what information their employees are providing to vendors. It is now prudent more than ever to ensure confidentiality agreements are put in place before any sensitive information is shared. Further, understanding the nature of the shared information is pivotal in safeguarding it under these new regulatory developments.
In June 2023, lawmakers in New York passed a bill to enact a statewide ban on noncompetes. Although Governor Kathy Hochul vetoed this bill due to overbreadth and concerns about its economic impact, she signaled favor towards a ban on noncompetes for middle-class and low-wage workers. The lawmakers are expected to reintroduce a revised version of the ban in 2024.
With the changes in regulatory landscapes across different states and potential future federal changes, it is crucial for firms across the board to revisit their trade secret protection policies and practices. Central to this is the implementation of robust and effective confidentiality agreements and a deep understanding of the information shared by employees.