Debating Employee Non-Competes and Trade Secrets
33 Pages Posted: 7 Mar 2017 Last revised: 11 Mar 2019
Date Written: January 3, 2017
Recently, a cacophony of concerns have been raised about the propriety of noncompetition agreements (NCAs) entered into between employers and employees, fueled by media reports of agreements which attempt to restrain low-wage and low-skilled workers, such as sandwich makers and dog walkers. In the lead-up to the passage of the federal Defend Trade Secrets Act of 2016 (DTSA), public policy arguments in favor of employee mobility were strongly advocated by those representing the “California view” on the enforceability of NCAs, leading to a special provision of the DTSA which limits injunctive relief with respect to employee NCAs.
Through our lens as trade secret scholars, we have decided to enter the fray and present this Article to explore both the values and detriments of NCAs, each taking sides in the debate and providing relevant information about the different approaches to the enforceability of these agreements. Finally, we come together to suggest a more nuanced middle-ground to encourage courts to engage in a more robust analysis that focuses on both the legitimate business interest to be protected by the NCA and reasonableness in the scope of the agreement. To that end, we recommend consideration of six questions to help guide courts in achieving a more equitable and balanced outcome to protect the interests of employers and employees.
Keywords: non-competition agreements, nca, ncas, injunction, trade secrets, enforceability, legitimate business interests, reasonableness, inevitable disclosure, restraints, employer, employee, defend trade secrets act, dtsa, employee mobility
JEL Classification: K10, K12, K20, K40
Suggested Citation: Suggested Citation