The legal landscape is rapidly changing with regards to restrictive covenants used by employers to protect against unfair competition and solicitation by current or former employees. This is especially true for employees in safety-sensitive positions or who work on government contracts subject to federally mandated compliance.

Construction-industry employers need to review their employment agreements to ensure they follow the current requirements dictated by federal and state laws on restrictive covenants, including noncompete provisions.

Executive Order; Proposed Rule

The July 9, 2021, Executive Order (EO) issued by President Joe Biden did not change the law of restrictive covenants directly. Rather, it “encouraged” the Federal Trade Commission (FTC) to act to regulate “the unfair use” of non-compete clauses and other restrictive covenants.

President Biden issued the EO to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” The language of the EO suggests that President Biden wants the FTC to act against abuses of restrictive covenants, rather than their reasonable use.

In response, the FTC proposed a new rule that, if finalized as currently proposed, would effectively prohibit non-compete agreements with employees, other than in exceptionally limited circumstances. If adopted, the proposed rule will require all employers that use any agreement containing a non-compete clause (or a clause deemed to be a...

Read Full Story: https://news.google.com/rss/articles/CBMidGh0dHBzOi8vd3d3LmphY2tzb25sZXdpcy5j...