Deadlines to comply with new restrictive covenant law loom in several states

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This article is part of a McDonald Hopkins series on developments in restrictive covenant law that dives deeper into how employers can protect their business interests in light of state - and potentially federal - limitations, strategies for revising employers’ non-compete and non-solicitation agreements, and other topics that will help businesses navigate the changing landscape of employee restrictive covenants.

In less than three months, the law regarding non-compete agreements will change – again. As addressed in our previous articles, numerous states have imposed regulations scrutinizing the level of restrictions placed upon employees in non-competition agreements in recent years. On July 9, 2021, President Joe Biden signed an Executive Order – the first federal order relative to restrictive agreements. This order encouraged the chair of the Federal Trade Commission to work with the rest of the FTC to study “the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” In recent years, states such as Illinois, Louisiana, Maine, Maryland, Massachusetts, Nevada, New Hampshire, Oregon, Rhode Island, Washington, and Washington D.C., have passed state laws that impose stricter limitations on employee non-competition and non-solicitation agreements.

As the New Year looms in the distance, employers – especially those with employees in Illinois or the District of Columbia – should revisit their non-competition agreements to ensure that they appropriately protect the employer’s business interests and comply with state law. Nevada’s new non-competition restrictions took effect on October 1, 2021, Illinois and Oregon’s new laws take effect on January 1, 2022, and Washington D.C.’s takes effect on April 1, 2022. We will continue to provide insights on any relevant updates as it pertains to other states.

The attorneys on the McDonald Hopkins Labor and Employment Team are available to help employers bring their restrictive agreements into compliance with state and federal restrictions and to assist employers in navigating the various state and federal restrictions. Please reach out to your McDonald Hopkins attorney for support in reviewing your agreements.

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