Non-compete agreement reform picks up steam in US
- Companies that require employees to sign non-compete agreements beware: Some states are limiting certain aspects of non-compete agreements, including the job types they cover and the employees who may be bound by them, reports Lexology.
- The Obama administration released a fact sheet on non-compete agreements, urging states to reform non-compete agreement laws. The fact sheet states that the agreements restrict employment opportunities for one in five workers.
- Illinois law prohibits employers from requiring low-wage earners to sign non-compete agreements. Utah restricts the duration of non-compete agreements signed on or after May 10 to one year. Massachusetts’ non-compete bill failed to pass this year before the legislative session ended. Eric Schneiderman, New York’s state attorney general, plans to introduce a proposal to restrict non-compete agreements next year, says Lexology.
Companies with proprietary information that requires protection should find out what reform proposals or amendments are underway in both the states in which they operate and states where employees live.
Non-compete agreements are extremely relevant to many industries, particularly the tech sector, where talent for new industries like machine learning is scarce and difficult to recruit outside of large tech conglomerates like Google. In August a federal court ruling added an extra wrinkle to non-compete agreements between companies that enter merger and acquisition (M&A) scenarios.