New administration seeks to limit non-compete agreements

On Behalf of | May 3, 2021 | employee rights |

Noncompete agreements have been used by Pennsylvania businesses as a means of regulating what an employee can and cannot do following a term of employment with a company. Indeed, these agreements historically have been fairly broadly used across the United States. With that said, there has also been pushback in regard to non-compete agreements, based on the contention that they inappropriately stifle competition and restrict worker mobility.

State regulation of non-compete agreements

States across the country have taken steps to regulate and restrict the use of non-compete agreements. The reality is that more activity has occurred in regard to legislative action in different states that is designed to reign in the scope of non-compete agreements.

Judicial action and non-compete agreements

For many years, judicial decisions have addressed the reach and scope of non-compete agreements, primarily to limit the geographic reach of non-compete agreements. In addition, these court decisions have limited the time period within which non-compete agreements can remain in force and effect.

Action by the U.S. Department of Justice

In recent years, the Department of Justice has become more active in addressing what it sees as inappropriately broad noncompete agreements. The expectation is that under the Biden administration, the Department of Justice is likely to become more assertive in regulating or controlling the reach of non-compete agreements. The agency is taking action currently based on contentions that certain non-compete agreements violate provisions of federal antitrust laws.

Former employees subject to what may be an impermissible non-compete agreement can protect their interests with legal assistance. An initial consultation can aid a person in understanding his or her legal rights in this regard.