Trade Secrets in Light of Non-Compete Bans

Many companies use non-compete agreements as part of their trade secrets management, but this strategy has been weakened in several states. California, Minnesota, North Dakota, and Oklahoma ban non-competes completely, and New York has a non-compete ban for its governor to sign by the end of the year. Illinois, Massachusetts, Washington, and the District of Columbia have created legislation that limits non-compete agreements based on wage/comp levels or occupation. At the federal level, the FTC is considering a nationwide ban on non-compete agreements for employees.

In light of the number of states that have banned or limited non-competes, companies should review their employee agreements and internal policies related to the protection of trade secrets. In particular, companies will want to be clear with its employees on what is considered to be a trade secret, who can access that trade secret, and what happens when an employee resigns or is terminated who had access to a trade secret.

Keep in mind, trade secrets aren’t just about the secret recipe. They can be the company’s client list or growth strategy. What do you consider to be your “trade secrets,” and are you protecting them that way?