By Shannon Hampton Sutherland and Gregory S. Bombard
Last week, the White House called on states to enact sweeping reforms to their non-compete laws. The White House’s new policy position is that “most workers should not be covered by a non-compete agreement” and that, although “each state faces different circumstances,” many employers have sufficient other targeted remedies to protect their legal interests.
In its policy statement, the White House called on states to enact “non-compete” reforms, including one or more of the following:
- A ban on non-competes for certain categories of workers, such as low-wage workers, workers in certain occupations that “promote public health and safety,” workers who do not likely possess trade secrets, or workers who are laid off or terminated without cause;
- Increased transparency and fairness, including, for example,
- requiring that non-compete terms be communicated to prospective employees before acceptance of a job offer or promotion,
- requiring consideration in addition to continued employment in exchange for non-compete agreements, or
- encouraging employers to better inform workers about non-competes;
- Increased incentives to employers to write enforceable contracts, such as:
- voiding of non-compliant non-compete agreements, and
- implementing appropriate remedies or penalties for employers whose policies do not comply with state non-compete statutes.
The White House’s position on “non-competes” does not appear to apply to trade secret protections, non-solicitation agreements, or non-disclosure agreements.
You can read the White House’s complete “State Call to Action of Non-Compete Agreements” here .
Non-compete reform has been a live political issue in many states in the past several years. The White House noted that at least 12 states considered reforms last year. Although this call to action from the White House is likely to reignite the debate in next year’s legislative sessions, the White House’s policy statement is just that — it simply represents the White House’s take on these issues and does not have any legislative impact on employers or employees by itself unless the states pass their own reform measures.
For more information, contact Shannon Hampton Sutherland, Co-Chair of the Duane Morris Non-Compete and Trade Secrets Practice, or Gregory S. Bombard, an active member of that Practice.