A noncompete agreement is one of several tools that businesses may use to prevent the unauthorized dissemination of confidential and trade secret information to competitors. In recent months, however, the Federal Trade Commission has proposed a new rule to ban noncompetition clauses, reasoning that such limitations restrict worker freedoms and harm competition. Anticipating that this proposed rule will be put into effect, the change provides businesses a good opportunity to assess their protection strategies employed for company trade secret and confidential information.
The FTC’s comments regarding its proposed new rule acknowledge concerns that the elimination of noncompete agreements could impact the protection of confidential information. In some (but not all) states, a business could rely on a noncompete agreement with an employee to act as a blanket protection from the unauthorized use of trade secret or confidential information if the employee would leave the company. The reasoning is that such information is effectively protected because the employee cannot move to other employment in which the information may be used to the detriment of the past employer.
