State-Specific Non-Compete Laws: Non-compete laws vary significantly by state. California (Cal. Bus. & Prof. Code ยง 16600) largely prohibits non-competes, while states like Florida generally enforce reasonable ones. Recent legislative changes in states like Illinois and Washington have placed additional restrictions on non-compete agreements.
FTC Proposed Rule: The Federal Trade Commission's proposed rule to ban non-compete clauses nationwide, which could significantly impact the enforceability of such agreements if finalized.
Defend Trade Secrets Act: Federal law that provides protection for trade secrets and must be considered when drafting non-compete provisions that aim to protect confidential information.
Reasonableness Doctrine: Common law principle requiring non-compete agreements to be reasonable in terms of geographic scope, duration, and scope of prohibited activities.
Consideration Requirements: Legal requirement that employees must receive adequate consideration (something of value) in exchange for signing a non-compete agreement, particularly relevant in severance context.
Age Discrimination in Employment Act (ADEA): Federal law that must be considered when drafting severance agreements for employees over 40, requiring specific language and review periods.
Older Workers Benefit Protection Act (OWBPA): Federal law requiring specific provisions and time periods for review and revocation when obtaining release of age discrimination claims in severance agreements.
Legitimate Business Interest Requirement: Legal principle requiring employers to demonstrate a legitimate business interest being protected by the non-compete provision, such as trade secrets or customer relationships.
Time Duration Restrictions: Legal limitations on the length of time a non-compete agreement can remain in effect, which varies by state and must be reasonable based on industry standards.
Geographic Scope Limitations: Restrictions on the geographic area where a non-compete can be enforced, which must be reasonable and related to the employer's business footprint.
