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How will employers handle a ban on non-compete agreements?

On Behalf of | Oct 26, 2023 | Employment Law

Businesses in New York have to compete with one another for a share of the market and also for the best possible talent. Even when a company hires a new executive or other professional, the risk is always there that another business will make a better offer and hire one of their employees.

Companies therefore have to think about protecting themselves not only when someone works at the business but also in the future if they don’t want employees moving to competitors. Now that non-compete agreements face increasing scrutiny and the looming threat of a federal ban, organizations may want to pivot away from them. How do companies protect themselves without non-compete agreements?

There are other restrictive covenants

Historically, non-compete agreements have been one of the main methods for organizations to protect themselves against workers leaving and taking company secrets with them. However, they are not the only type of restrictive covenant that businesses can integrate into employment contracts.

Organizations can use non-disclosure agreements as a means of preventing current and former employees from sharing trade secrets with outside parties. They may also rely on non-solicitation agreements to prevent workers from using trade secrets, like client lists, when they go to work for a competitor or start a competing organization.

Given that a federal ban on non-compete agreements could be possible in the upcoming months, employers may want to reconsider how they protect themselves to avoid a scenario in which they have unenforceable contracts. Understanding how the terms of employment law agreements may change in the next few years can benefit both businesses and people negotiating new employment agreements with a business.

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