For decades, companies have used post-employment noncompete agreements to protect their confidential information, trade secrets, and customer relationships. An employee's contractual obligation not to leverage "insider" information and customer relationships for a competitor – enforceable by an injunction in court – has been a powerful proactive tool in keeping a company from picking off key employees of its competitors, poaching its customers, and stealing its trade secrets and confidential information.

The protective benefits noncompetes offer have always been in tension with the impact they have in limiting an employee who wants to secure a new job in his or her field. The current trend is toward increased restrictions on the use and enforcement of noncompetes, which are in the crosshairs. The Federal Trade Commission (FTC) recently adopted a rule that, if it becomes effective, will ban all post-employment noncompetes with only one narrow exception for certain senior executives. The rule does not apply to noncompetes entered into with the sellers of a business in a bona fide transaction or in certain industries the FTC does not govern, including nonprofits and certain banks, among others. The FTC has likewise used its enforcement powers to pursue employers that use and enforce noncompetes. The rule has been challenged in no fewer than three legal actions questioning the FTC's authority to regulate noncompetes, and trade organizations from virtually every industry have argued that the FTC's findings undergirding the rule have no rational relationship to what actually occurs in their respective industries, and is thus arbitrary and capricious. Most commentators expect that the rule will be enjoined and ultimately struck down by the courts.

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