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Tip: Duration and geography matter.

With a Federal Trade Commission rulemaking on non-competes in progress, politicians and healthcare providers are coming out on both sides of the issue.

On one hand: President Biden praised the rule in a Jan. 5 tweet, and again in February, at the White House Competition Council and in his State of the Union address. And many states and even Congress are introducing their own bills in attempts to ban non-compete agreements.

On the other hand: The proposed rule is not a forgone conclusion. Most experts agree it will pass in some form, but the final form, whatever it may be, will most likely face litigation that can delay or even stop the bill.

What To Do In The Meantime?

If you use, restrictive covenants, you must look at protecting your business now. Legal experts recommend agencies:

1. Examine all current restrictive covenants.

•  Look at how existing non-compete agreements were entered into and determine if they are legitimate and truly necessary. If so, ensure they are reasonable in terms of duration, geography, and scope of activities prohibited.
•  Review the agency鈥檚 competitive and confidential information and trade secrets; if needed conduct a comprehensive review to make these determinations. Then assess your other restrictive covenants such as non-disclosure and non-solicitation clauses. Well written ones will hold up against functionality testing allowing you to protect confidential information and customer relationships, while safeguarding employee retention.

2. Ensure policies and procedures, and training is up to date.

• Review policies and procedures associated with restrictive covenants such as handling and use of confidential information, and confirm training on the subject is thorough and current.
• To protect restrictive provisions, proper policies and procedures are essential. For example, best practices for confidential information should be need to know only, and employee training on handling this information must be in place to ensure your protection.

3. Determine where your technological controls stand.

• Do I have proper controls in place to safeguard emails and sharing of confidential information? Do we forbid use of and validate that personal email accounts are not used for business purposes?

4. Evaluate service agreements.

• Are contracts structured carefully and contain protections for sensitive and confidential information?

5. Continue to follow developing legislation changes.

• Pay attention to the national dialog but keep an eye on your state and local restrictive covenant discussions, too, to prevent surprises.