“Non-competes” or clauses that restrict employees from engaging in a competing business for a period of time after their employment ends are an important tool in the arsenal of employers seeking to protect their business interests, and in particular their trade secrets and other confidential information. Increasingly, however, non-competes seem to be coming under fire with many jurisdictions introducing tighter limitations on their use or even considering banning them entirely.
As has been previously covered in Employment Law Worldview, the US Federal Trade Commission (FTC) placed an outright ban on non-competes in 2024. While the Federal ban was later overturned, several US states (California, North Dakota, Oklahoma and Minnesota) already have near-total bans and (as detailed in the table below) several others are currently legislating against the use of non-competes for defined categories of employee, including those on lower salaries and medical professionals.
Outside the US, non-competes are also an area of increased focus with several jurisdictions currently consulting on reform, proposing draft legislation or giving judicial scrutiny to this topic.
So, what’s driving this?
The Case for Reform
The case for reform as laid out by the various governments boils down to a concern that non-compete clauses are being over-used in the contracts of workers who do not in fact have access to trade secrets and other confidential or otherwise sensitive or protectable information,...
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