Last month, the Obama administration released a report in which it made several legislative recommendations regarding non-compete recommendations. As we noted previously, states currently have different policies regarding non-compete agreements, with some allowing employers more freedom to use these agreements to prevent competition than others.
The report suggested, first of all, that states prohibit non-compete agreements not necessarily for all workers, but at least for specific categories of workers. This recommendation applies to workers who make less than a given wage, workers in public health and safety, workers who are not likely to obtain trade secrets, and workers who are particularly at risk of suffering harm from non-compete agreements.
Another recommendation the report made is that legislatures pass laws ensuring that employees are protected from unfair negotiation tactics and lack of transparency by employers. This recommendation is aimed at employers who, for instance, propose a non-compete agreement after a job offer or promotion has been accepted or who do not offer some sort of consideration, or quid pro quo, to existing employees who are faced with a request to sign a non-competition agreement.
A third legislative recommendation the administration made is that states enact incentives to employers who negotiate enforceable non-compete agreements, such as prohibiting courts from altering unenforceable non-compete agreements so that they are enforceable. Virginia, it is worth noting, is among a small group of states which already have this rule.
In our next post, we'll look more closely at the rule and draw out some of the implications of these legislative recommendations.
Whitehouse.gov, State Call to Action on Non-Compete Agreements, Accessed Nov. 11, 2016.
Whitehouse.gov, Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses, May 2016.