Hunton Employment & Labor Perspectives

Restrictive covenants and non-compete agreements are increasingly under attack, this time by the Federal Trade Commission (FTC). Companies rely on these restrictions to protect investment in intellectual property, technology and employees. On January 9, the FTC suggested that employee freedom of mobility trumps all of these legitimate business reasons companies use restrictive covenants and non-compete agreements. The FTC has increased its attention to restrictive covenants, and non-compete agreements in particular, under the theory that these types of provisions unfairly limit employee mobility and have an adverse impact on competition among employers. Three of the five FTC commissioners oppose the current unregulated use of non-compete agreements and advocate the FTC taking steps to curtail them.