As a business leader, you’ve likely relied on non-compete agreements to safeguard your company’s confidential information, protect your investments in employee training, and maintain a competitive edge. However, with the Federal Trade Commission’s (FTC) recent ban on non-compete agreements set to take effect on September 4, 2024, it’s time to reassess your strategies and adapt to the new landscape.

Non-Compete Alternatives

While the ban may present challenges, there are several alternative approaches you can implement to protect your business interests without running afoul of the new regulations.

One key tool in your arsenal is the non-disclosure agreement (NDA). By crafting robust NDAs that clearly define confidential information and the obligations of employees to maintain confidentiality, you can help prevent sensitive information from falling into the hands of competitors. It’s crucial to ensure that all employees, contractors, and third parties with access to confidential information sign NDAs and that these agreements are regularly reviewed and updated to comply with changes in laws and regulations.

Another avenue to explore is intellectual property protection. By filing for patents, trademarks, and copyrights, you can safeguard your company’s inventions, designs, and creative works. Developing a clear intellectual property strategy and policy, monitoring for potential infringements, and enforcing your rights when necessary can help you maintain your competitive advantage.

Trade secret policies are another essential component of your business protection plan. Creating and implementing a comprehensive trade secret policy that outlines the types of information considered trade secrets and the measures in place to protect them can help you keep your valuable information secure. Developing procedures for handling, storing, and accessing trade secret information, as well as providing regular training to employees on best practices, can further strengthen your defenses.

While non-compete agreements may no longer be an option, you can still use employment contracts to protect your interests. By including non-solicitation, confidentiality, and invention assignment clauses in your contracts, you can help prevent former employees from poaching clients or other employees, disclosing sensitive information, or claiming ownership of inventions developed during their tenure. As with NDAs, it’s essential to ensure that your employment contracts are legally compliant and enforceable in the relevant jurisdictions and that they are reviewed and updated periodically to reflect changes in laws and company policies.

Navigating the new landscape created by the FTC’s ban on non-compete agreements may seem daunting, but by implementing a combination of legal instruments, policies, and strategies, you can protect your business interests and maintain your competitive edge. Be sure to connect with the attorneys at Wegman Hessler Valore (who specialize in business law, HR and intellectual property) in developing and implementing your strategies and communicating changes in policies and procedures to your employees. They remain available to you.

Wegman Hessler Valore specializes in business law for business leaders, applying legal discipline to solve business problems to help leaders run smarter. For over 50 years, this Cleveland law firm has provided full-service strategic legal counsel for closely held businesses, corporations, and individuals. Practice areas include: business law; municipal law; litigation; corporate governance; estate planning and wealth protection; intellectual property; HR and employee matters; commercial real estate; business acquisition, and more. Get in touch to learn more.

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Copyright © Wegman Hessler Valore. This information is for educational purposes. It does not reflect an attorney-client relationship with the author(s) or the firm. This information should not be used as a substitute for professional legal advice in specific situations.