The Federal Trade Commission (FTC) has proposed a new regulation that would effectively ban noncompete agreements between employees and employers in all 50 states. As a former employment law attorney who drafted, negotiated and litigated many noncompete agreements, I believe the impetus for the FTC's action is sound, but the proposed regulation is overly broad and unnuanced. I also think federal legislation would be a better way to go, especially since the regulation may not survive U.S. Supreme Court scrutiny.
The Case for Banning Noncompetes
The first noncompete agreement I litigated was a lawsuit against a boat mechanic who made little more than minimum wage. Unhappy with his boss, he left one boat company for another. There were no trade secrets or specialized expertise lost. The lawsuit was purely employer vindictiveness.
During my law career, I dealt with noncompete agreements directed against salespeople, printshop employees and technicians (including a woman who quietly quit rather than continuing to be subjected to her boss's unwelcome sexual advances). In these cases, the employers' argument for a legitimate protectable business interest was flimsy at best. However, the economic realities of the U.S. legal system heavily favor former employers. Few employees have the resources to contest the noncompete agreement's enforceability, and most prospective employers don't want to inherit a lawsuit.
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