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Non-Compete Agreements in a Biden Administration

Employment Attorney Brandon Grysko discusses what could be coming up under the anticipated Biden-Harris Administration as it relates to your business.

In the past, President-elect Joe Biden has indicated he would like his administration to maintain a strong position on non-compete agreements and no-poaching covenants. As it pertains to your business, what is a non-compete agreement? What is a no-poaching covenant? What will these agreements look like under a Biden Administration? We will answer these questions in-depth in the article below and the video above.

What is a Non-Compete Agreement?

A non-compete agreement is an agreement between an employee and employer, stating when that employee leaves the employer or company, they are mandated to not compete within a certain geographic range and certain period with that business/employer.

In other words, this employee is unable to start his or her own business that would compete with that former employer. They are also unable to be hired as a consultant or employee by a company operating in the same business category for a year and within a 50-mile radius, for example.

What is a No-Poaching Covenant?

In its basic form, a no-poaching covenant is an oral or written agreement between two or more companies not to compete for each other's employees. This is accomplished by not soliciting them during employment or not hiring them for a period of time after the termination of their employment.

As these agreements have developed over the years, we have seen them range from 6-months to 2-years, even as far as 3-years. We have also witnessed geographic area restrictions from 20-miles to 50-miles, even statewide and nationwide. However, depending on what state you are in, a no-poaching covenant or non-compete agreement may not be enforceable.

This growth in restrictions illustrates the changing nature of our global economy and the fact that every end of the world is accessible. Non-compete agreements have developed to function in this global economy, and in many ways have restricted the way employees can trade their services with various employers

Biden Administration Plan

What the Biden-Harris Administration aims to instill is a crackdown on the enforceability of non-compete agreements and no-poaching covenants. Though enforcement of this crackdown is still unclear, it could come from administrative rules through various federal agencies such as the Department of Labor.

However, with yesterday's Georgia Run-Off Election declaring Democrats Rev. Raphael Warnock and Jon Ossoff as the clear winners, it appears the Biden-Harris Administration will have great flexibility in mandating the enforceability of non-compete agreements and no-poaching covenants.

While a lot is still unclear, what I think is clear is there are changes on the horizon that could affect your business as it pertains to non-compete agreements, so Fausone Bohn recommends business owners remain diligent and keep an eye out for new regulations.

With the new year already here, it's time to dust off those corporate documents, you need to make sure your documents and agreements are still relevant and reasonable based on what type of business you operate. If you feel it is time to receive expert counsel for your business, contact Business Attorney Brandon Grysko by email or by phone at (248) 380-0000.

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