Yet the debate on this traditional issue of state law has spilled over into the federal level – in Congress (in the House of Representatives and the Senate) and in the Federal Trade Commission. Much of the progress in favor of restrictions or bans is based on (1) the erroneous assumption that Silicon Valley is the epicenter of technology because California prohibits non-competition bans; (2) the latest preliminary, fruitless and somewhat inconsistent studies, the nuances of which are ignored; 3. the erroneous assumption that trade secrets and confidentiality agreements provide adequate protection of trade secrets; (4) the erroneous assumption that non-competition prohibitions prevent workers from using their general skills and knowledge; and (5) the dissemination of abuse in the use and development of competitions. If the errors are corrected and the problems are put into context, a reasonable balance is one that prohibits non-compete bans for low-wage workers and health care professionals (like the Obama administration`s call to action), requires notice where a non-competition clause is required, the ability to correct excessive non-competition prohibitions after the fact, and provides a reasonable means for companies seeking non-competition clause. to rely on less restrictive alternatives. As described above, although nine witnesses testified, the three most direct and substantial witnesses were Noah Phillips, Dr. Evan Starr and Dr. Robert Topel. Their testimony collectively and consistently stated that non-competition bans, even if sometimes misused, serve legitimate purposes, including “incentives to invest in workers and the protection of trade secrets – dignified goals in our increasingly knowledge-based economy.” In summary, the assertion clearly showed that a blanket ban can have serious unintended effects, and if regulation is to be considered at the federal level, it must be a differentiated approach.
As Commissioner Phillips said, “[t]he mobility [which, to some extent, could be affected by non-competition measures] is a complex subject, and the consideration of the contributions of both parties has a better chance of contributing to a thoughtful response that will improve the lot of American workers and the nation as a whole.” This concern is consistent with previous responses by FTC President Simons to written questions from the Senate Judiciary Committee, in which President Simons stated: “In certain circumstances, narrowly tailored non-competition clauses may benefit competition. Non-competition clauses can also encourage organizations to invest in staff training by reducing the risk that employees will continue to develop their new skills to a competitor. Check first if this is necessary. A non-compete agreement can be effective if your employee has access to trade secrets or other proprietary information. If it does not, a non-compete clause may not be appropriate. Non-competition prohibitions are enforced in appropriate circumstances in Massachusetts.  Questions? For answers and advice on how best to prepare for the possibility that minnesota will join the few other states to ban non-compete agreements, contact Wessels Sherman Lawyers Au (952) 746-1700.