Trade Secret Protection Plans Provide Certainty to Employers

The protection of trade secrets has long been understood to be a legitimate business interest, and, traditionally, companies have used non-competition clauses to protect their trade secrets. Now, with non-competition agreements in doubt and facing greater scrutiny, companies will need to rely on other protection mechanisms.

June 11, 2024 at 04:34 PM

6 minute read

Trade Secrets

Hannah Elizabeth Jarrells

Edward D. Lanquist

What You Need to Know

The Federal Trade Commission's final rule prohibits most employers from binding the majority of American workers to post-employment non-competition agreements.
While the Final Rule's enforcement is expected to be delayed and will likely never take effect, the Final Rule itself is a good reminder that non-compete agreements in the employee-employer context are under more scrutiny than ever.
Companies should implement a trade secret protection plan to ensure that their trade secrets are secure and that they can seek protection under the DTSA or UTSA.

Trade Secrets Baker Donelson recently published an article called "The End of Non-Competition Agreements? Not so Fast!" The article summarizes the Federal Trade Commission's (FTC) final rule prohibiting most employers from binding the majority of American workers to post-employment non-competition agreements (Final Rule).

While the Final Rule's enforcement is expected to be delayed and will likely never take effect, the Final Rule itself is a good reminder that non-compete agreements in the employee-employer context are under more scrutiny than ever and in some states, like California, Minnesota, North Dakota, and Oklahoma, are already banned as a matter of law.

Other states, such as Colorado, Washington, Oregon, and Illinois, only allow employers to bind highly compensated employees to traditional non-competition agreements. Even in states that are considered to be employer-friendly in the context of non-competition agreements, judges are carefully reviewing non-competition agreements to ensure that they are reasonable in their duration, scope, and geography and are no broader than necessary to protect the employer's legitimate business interests.

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