Top 10 noncompete law developments of past year

Lawmakers and courts continued to demonstrate hostility toward noncompete and no-hire agreements in 2021. The activity underscores employers’ need to stay current on the diverse state-specific limitations governing restrictive covenants, new federal activity in the area, and ongoing case law developments.

Advice based on national trends

In light of the trends, national employers should:

• Be selective in identifying the categories of employees required to sign the agreements;
• Rely on allowable choice-of-law and -venue provisions to maximize the chances of enforceability;
• Keep a keen eye on likely federal developments in the year ahead; and
• Avoid no-poach agreements with employers as a poor substitute for narrowly tailored employee noncompetes.

Below is a list of the top 10 developments in noncompete law during 2021.

Biden administration issues Executive Order

On July 9, 2021, President Joe Biden issued an Executive Order (EO) on “Promoting Competition in the American Economy.” Among other things, it encouraged the Federal Trade Commission (FTC) to ban or limit noncompetes. Notably, the order didn’t create new rules to curtail the use of noncompete agreements. Instead, supplementary materials released by the White House included a “Fact Sheet” indicating the FTC should “ban or limit” the agreements.