On April 23, 2024, in a move that will have significant ramifications for employment contracts and intellectual property (IP) rights, the Federal Trade Commission (FTC) issued a rule banning all future noncompete agreements nationwide with limited exceptions. The rule marks a pivotal moment for trade secret protection and enforcement strategies as it promises to reshape the relationship between employers and employees and impact safeguards for proprietary information.
Noncompete agreements have long been used to temporarily restrict employees from working for a competitor or starting a competing business after leaving an employer. These agreements are often used to protect a company’s IP by prohibiting employees from taking and/or disclosing proprietary information, such as customer lists, to competitors.
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