During the annual Employment Law Symposium hosted by Ward and Smith, attorneys from the firm provided essential information on pressing issues for employers. The discussions focused on various legal changes affecting workplace policies, including updates on Immigration and Customs Enforcement (ICE) investigations, noncompete agreements, protection of trade secrets, and compliance with diversity, equity, and inclusion (DEI) programs.
Understanding Noncompete Agreements
Emily Massey, a North Carolina State Bar Board Certified Specialist in Employment Law, addressed the topic of noncompete agreements. She highlighted a recent development where a federal judge in Texas halted a regulation introduced by the Federal Trade Commission (FTC), which aimed to ban most forms of noncompete agreements in the United States. “The FTC had passed a regulation banning most forms of noncompete agreements,” Massey explained. “A federal judge in Texas halted the ban.” Following this, the FTC appealed the decision, a move that was recently dropped by the Trump administration.
Massey noted that the National Labor Relations Board (NLRB) is likely to scrutinize noncompete agreements less rigorously under the new administration. The current General Counsel has rescinded several memoranda from the previous administration, indicating a shift in enforcement priorities.
Various states are trending towards limiting noncompete agreements, especially those deemed overly broad. Florida is one of the few states that recently made changes favoring the enforceability of noncompete agreements. “Kansas made a recent change I would love to see gain traction elsewhere,” Massey noted, adding that non-solicitation agreements are being recognized as enforceable. Virginia has also recently banned noncompete agreements for non-exempt employees eligible for overtime under the Fair Labor Standards Act.
Protecting Trade Secrets
Gavin Parsons, a litigation attorney at Ward and Smith, elaborated on the importance of protecting trade secrets, which can comprise any information that offers a business a competitive advantage. “Trade secrets can include anything from client information to unique manufacturing processes,” Parsons explained. Unlike patents, trade secrets do not have an expiration date, provided that the information remains confidential.
Many employers may not recognize that they already possess trade secrets, which can include information from research and development, client data managed in systems like Salesforce, and proprietary sales strategies. Parsons highlighted that there has been an increased focus on trade secret protection due to the restrictions on noncompete agreements. “With employees able to leave more freely now, employers must be proactive about safeguarding their information,” he said.
The rise of technology has also affected trade secret protection strategies. “Technological developments make it easier to steal information,” Parsons noted, referring to how remote work environments may encourage employees to mishandle confidential data. He emphasized that protection measures should start during the onboarding process, with clear policies in place regarding the handling of confidential information.
Employers are advised to monitor data usage closely to detect any unusual activities, especially during employee departures. Parsons also touched on the intersection of artificial intelligence and trade secrets, explaining that while AI systems do not inherently possess trade secrets, organizations should remain cautious about sharing sensitive information with external AI platforms.
As the legal landscape around employment continues to evolve, companies must stay informed and adapt their strategies accordingly. Regular reviews of noncompete agreements and enhanced measures for trade secret protection are essential steps for employers navigating these complexities.
