The Association released two new resources on non-compete agreements: a white paper detailing the perils of a total ban of non-competes and advocating instead for reasonable limits through federal legislation, and the results of a member survey on the impacts of the FTC’s ban.
- Preserving the Responsible Use of Non-Compete Agreements: This report presents the business case for non-compete agreements and why it is essential for policymakers to preserve their responsible use. Specifically, we advocate for federal legislation establishing an income threshold below which noncompete agreements would be prohibited.
- HRPA member survey results: The Association conducted a recent survey on company responses to the FTC’s ban on non-compete agreements and continued usage of restrictive covenants. The results will inform our ongoing advocacy on this issue. Conducted May 2–9, the survey features responses from 130 member companies as well as anecdotal responses from members on specific questions and issues.
Survey Highlights:
- Nearly all members use non-compete provisions and will continue to do so: Over 90% of respondents use non-compete agreements, with 66% using both non-competes and forfeiture agreements. 89% of respondents indicated that they will continue using non-competes until the rule’s effective date.
- Major impact to trade secrets and compensation strategy: Nearly two-thirds of respondents indicated that the ban would cause their company to more aggressively pursue clawbacks and forfeitures for allowable reasons, while more than half indicated that they will likely have to pay more through long-term equity or garden leave.
- Growing support for federal law banning non-competes for non-executives: Nearly half of respondents indicated that they would support a federal law (that preempts state laws) banning non-competes for non-executive employees without access to trade secrets or proprietary information.
