American Indian Owned Law Firm

Employers can no longer use noncompete agreements

On Behalf of | May 9, 2024 | Corporate & Business Law

Are you thinking of starting a business this year, or are you already a business owner? If so, you may have considered using noncompete agreements when you hire employees. You want to prevent employees from immediately switching to the competition, as that could harm your business and put your intellectual property at risk.

If so, you should know that the Federal Trade Commission recently banned the use of noncompete agreements. They are simply not going to be upheld by the court. You need to reconsider your employment contracts if you already have workers who have signed noncompetes, and you need to remember not to use them moving forward. They will not stand or be enforced, so future noncompetes will be as worth as little as the paper they are printed on.

Do you have any other options?

When it comes to intellectual property issues, there are certainly other options. You can use trademarks, copyrights and patents, depending on the type of intellectual property and what you need to protect. Yes, your employees may need access to this intellectual property while working for the business, but you can legally prohibit them from simply taking it to the competition.

As far as keeping workers from joining the competition, though, it is up to you as a business owner to be competitive. The FTC does believe that banning noncompetes should raise wages for workers. Employers will not be able to prohibit movement in the job market, so they will have to offer competitive wages and benefits if they want to keep talent at their business.

This ban is a major change to employment laws, and it’s very important that you understand all of your legal obligations as an employer.