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New Developments Surrounding Non-Compete Agreements

Jul 27 2021

Amanda DeMatteis: Hi Josh.

Josh Goodbaum: Hi, Amanda. What are we going talk about today?

DeMatteis: Today, we’re going to talk about non-competes. There’s been a huge development in non-competes that I think our Connecticut employees are really going want to hear about. We get a ton of calls about non-competes, whether someone has one and wants to know if it’s enforceable, or if it’s reasonable, or people that are getting a new job and their employer has presented them with a non-compete and ask them to sign it. People don’t want to be restricted when moving from one job to the next but unfortunately, they are if there’s a non-compete in place. What has the federal government done recently that is maybe changing the landscape of this?

Goodbaum: Yeah, so as background, part of the big problem with non-competes is not just restrictions on employees moving between jobs, but also that it’s really difficult to figure out ahead of time, whether a non-compete is enforceable or not because under Connecticut law, they’re enforceable to the extent they’re reasonable and nobody knows exactly what that means. We at Garrison Levin-Epstein have been supporting a bill that the Connecticut General Assembly considered in this past legislative session that would put some more clarity, some more meat on the bones of the reasonableness analysis with respect to non-competes. 

Unfortunately, the bill did not become law this session, but we’ve had a development on the federal level, not in the state level, that’s worth knowing about. On July 9th, 2021, President Biden signed an executive order concerning competitiveness in the economy. It concerns a number of different aspects of competitiveness like the merger of large corporations or social media, all kinds of different things. But one of the facets of this executive order that concerns us, in particular, is about non-competes and it asks the Federal Trade Commission, which is the agency in the federal government that is concerned with competition, one of those agencies, to review non-competes and to consider exercising its rule-making authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” The Biden administration is recognizing  that non-competes keep workers from moving from one job to another that they may want more and what that then does, is it suppresses wages because if you can’t leave your job to go to a better job, your employer doesn’t have as much incentive to pay you more. You’re not going to get a raise if your employer doesn’t think you might leave or at least they’re not as likely to pay you away. So this is a really important development, we’re going to stay on top of it here. We’ll keep updates on our website, garrisonlaw.com, and of course, hopefully, this is a sign of good things to come for Connecticut workers and workers around the country as we try to rein in non-competes and come up with some common-sense solutions to really what is a serious problem taking America’s workers.

DeMatteis: Great update, let’s hope that it works out. Thank you guys so much for watching, we hope you learned something today.

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