Becoming More Like California? a Potential National Movement Towards Restricting the Use of Non-competes

• Jurisdiction: United States,Federal,California
• Citation: Vol. 47 No. 2
• Publication year: 2022
• Author: Catherine Lui
• topic: Business of Law,Contracts,Labor Law,Federal,Upcoming Legislation

BECOMING MORE LIKE CALIFORNIA? A POTENTIAL NATIONAL MOVEMENT TOWARDS RESTRICTING THE USE OF NON-COMPETES

Catherine Lui
Orrick, Herrington, & Sutcliffe LLP

California has long been the forefront of promoting employee mobility through Business & Professions Code Section 16600, which states that except under limited circumstances, "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void."¹ While California was long an outlier in terms of restricting the use of non-competes, the rest of the nation may now be moving more in line with California—led by President Biden's Administration.

In July 2021, President Biden issued an executive order directing the FTC to ban or limit non-compete agreements.² In his remarks, President Biden called out how non-competes are not just limited to "high-paid executives or scientists who hold the secret formulas for Coco-Cola" but that a "recent study found one in five workers without a college education is subject to non-compete agreements."³ President Biden further expressed concern that the non-competes disproportionately impact women and women of color.

In December 2021, the DOJ and FTC met for a two-day workshop to discuss how to execute President Biden's Executive Order and competition...