Federal Trade Commission says no to noncompetes

For several years there has been a move to narrow or potentially eliminate noncompete clauses in employment contracts. Various states have imposed a variety of limitations, including prohibiting the process of blue lining (amending a contract if some portion is found to be unenforceable) and, in some instances, prohibiting noncompetes entirely. Earlier this year, the Federal Trade Commission (FTC) proposed new regulations that would prohibit most noncompete agreements. Read on to learn what this could mean for businesses in Iowa.

Noncompetes in Iowa

In Iowa, noncompetes have been considered to be generally enforceable so long as their terms are reasonable, and they don’t violate any significant public policy. The state has occasionally seen noncompetes overturned by the courts, such as in medically underserved rural areas where a noncompete for mental health providers or other specialty providers has been deemed to limit accessible care.

In the last legislative session, Iowa amended Iowa Code 135Q to provide that healthcare staffing agencies for registered nurses and certified nurse aides were no longer able to include noncompetes in the staffing agreements. This change essentially bans noncompetes in healthcare staffing agencies for most employees.