Brian Hartstein Quoted in WorldatWork Article About Alternatives to Noncompetes for Protecting Trade Secrets
Brian Hartstein, Chicago office chair of the Quarles & Brady Labor & Employment Practice Group, was quoted in a WorldatWork article exploring other ways companies can protect their trade secrets and intellectual property as more states have placed limits on the use of noncompete agreements.
Hartstein provided context about the federal and state-level regulatory environment around noncompetes and what employers should be thinking about moving forward. An excerpt:
Brian Hartstein, a partner in the Chicago office of the Quarles & Brady law firm, explained that national efforts begun at the Federal Trade Commission (FTC) under the Biden administration to ban noncompetes for most employers are currently at a standstill.
“After an injunction prevented the nationwide ban from going into effect, the FTC appealed the decision,” he said. “In March of this year, the FTC asked the [Eleventh Circuit Court of Appeals] to stay the commission’s appeals for 120 days to reconsider the government’s position given the new administration.”
Hartstein noted that many observers anticipate the Trump FTC to withdraw the previous administration’s “far reach” rule, but interest in limiting restrictive covenants does not fall along strictly partisan lines. He said there also are some indications the Trump FTC will continue to look at limitations on the use of such covenants — albeit with a focus more on the benefits to employers as opposed to worker protection.
Hartstein added that, at the state level, there have been an influx of restrictions in recent years, including the addition of income thresholds or other notice requirements to make noncompete agreements enforceable. So far, four states (California, Minnesota, North Dakota and Oklahoma) have banned the agreements for all workers, and others have set income levels that essentially bar them from a large portion of the working population.
Given the variances in these rules from state to state, Hartstein said employers should review their agreements any time they enter a new jurisdiction and not just rely on form documents, adding that the days of utilizing a single restrictive covenant agreement nationwide are over.
“Employers need to carefully analyze state-specific restrictions for compliance and/or develop new language and restrictions for the particular jurisdiction,” he said. “Employers should also strongly consider refining and narrowing the scope of nonsolicitation provisions and addressing sensitive information through confidentiality and intellectual property protections.”
Please visit our Federal Policy Watch: Monitoring White House Developments page for more insight about navigating changes at the federal level.