Non-competes are dead: What to use instead

On Behalf of | Apr 26, 2024 | Business Law |

If you’ve paid any attention at all to the issue, you probably knew it was coming – but it’s now official: Non-compete agreements are effectively dead.

Even though business groups hope to overturn the new rule by the U.S. Federal Trade Commission, business owners need to respond to the increasing likelihood that non-compete agreements are a thing of the past.

How do you protect your company now?

Employers still have a lot of tools in their toolboxes to make sure that they protect their business operations and intellectual property from misuse by former partners, employees and contractors. These include:

  • Non-solicitation agreements: If you want to stop former employees or partners from poaching your clients or existing employees, a narrowly tailored non-solicitation agreement can stop that from happening.
  • Non-disclosure agreements: NDAs are confidentiality agreements prohibiting former associates from disclosing any confidential or proprietary information obtained during their employment. They won’t stop an employee from working for a competitor, but they will stop them from sharing your sensitive information.
  • Garden leave clauses: Garden leave clauses require departing employees in sensitive positions to serve out a notice during which they are paid but not permitted to work. This allows the employer to protect its interests by preventing the employee from immediately joining a competitor or disclosing sensitive information.

Overall, while non-compete agreements were just one tool for protecting business interests. Employers still have various other legal and strategic options available to them when they want to safeguard their confidential information, intellectual property and competitive advantage.