Noncompete and trade secret law has evolved rapidly in the last decade in Georgia and nationally, and 2023 was no different. Below are some key lingering issues to monitor in 2024.
2024: NONCOMPETE AND TRADE SECRET LAW
1. Will the Federal Trade Commission Ban Noncompetes?
2023 started with a bang with the FTC issuing a proposed rule in early January of last year that would ban noncompetes. The rule elicited thousands of comments from the public during the notice-and-comment period, but there has been little news out of the FTC about the rule since the comment period ended. So the open question is when will the FTC act, and what will a final rule look like?
Many are predicting the FTC will issue a final rule this Spring. But will the FTC dial back its original proposed broad-based ban and allow noncompetes for certain types of employees, particularly senior-level executives and employees with access to trade secret information? And will the FTC's final rule survive an inevitable court challenge? Businesses and industry groups are closely monitoring the FTC's next steps.
2. Nonrecruitment Covenants in Georgia – When are they Enforceable?
Last year the Court of Appeals held that Georgia's restrictive covenant statute requires that employers must include a territorial limitation in a nonrecruit for the covenant to be enforceable. The Georgia Supreme Court agreed to review the decision and is thus poised to clarify the law on this unique issue. Stay tuned for updates from BFV on drafting nonrecruitment covenant that comport with Georgia's evolving law.
3. Will More States Ban or Limit the Use of Noncompetes?
2023 was another hot-bed year for legislative activity in the
area of noncompetes.
Minnesota banned noncompetes. New York's legislature passed a
ban on noncompetes, but the governor vetoed the law. Some states
explored adding wage-based restrictions on using noncompetes. Some
states implemented noncompete bans for certain healthcare workers
and veterinarians. California made its already-existing broad
noncompete ban even more robust. 2024 promises to be no different
with more state-level legislative activity in this area.
Employers, particularly those with employees in different states across the country, should continue to keep a close eye on state law noncompete developments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.