In this episode of S&C’s Critical Insights, Annie Ostrager, Co-Head of S&C’s Labor & Employment Group, and Jeannette Bander, a partner in S&C’s Executive Compensation Group, discussed non-compete agreements and the evolving nature of their enforceability, including developments at the federal and state level.
At the federal level, the Federal Trade Commission proposed a rule in January 2023, which, if adopted, would ban most non-competes between companies and their employees and independent contractors. Annie and Jeannette noted that until the FTC rule is finalized (as soon as next week) or other federal legislation is adopted, the enforceability of non-competes remains a state-by-state issue.
At the state level, they addressed proposed legislation in New York that would affect non-compete agreements and recently passed legislation in several states, including California. They also discussed recent decisions from the Delaware Chancery Court, which was particularly active in this space in 2023.