The employee non-competition agreement landscape continues to evolve rapidly, with several states enacting new limits on the use of non-competition agreements between employers and employees. Once a valuable tool for employers to protect their businesses from unfair competition, loss of customers, or misuse of company confidential information, many states have increasingly limited the enforceability of such agreements.
The federal government is now weighing in on the appropriate use of non-competition agreements between employers and employees. President Biden’s July 9, 2021 Executive Order asks the Federal Trade Commission (“FTC”) to limit such agreements—signaling a potential expansion of federal regulation of agreements between employers and workers. And a pending Senate bill would ban most non-competition agreements. Given these developments, government contractors and other employers should assess whether their use of these agreements with employees is consistent with recent state developments and aligned with the broader trend toward limiting the enforceability of these agreements.