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Tips for protecting your business without noncompetes

On Behalf of | May 13, 2024 | BUSINESS & COMMERCIAL LAW - Business & Commercial Law

If you’re a business owner, you’ve probably already heard that the Federal Trade Commission (FTC)  has banned almost all noncompete agreements.

The FTC says that noncompete agreements do far more economic damage than they should, by limiting personal freedoms and stifling innovation. While there are bound to be appeals over the ruling, the reality is that business owners need to be thinking ahead about how they can protect their company’s proprietary information in the future without these agreements.

Here are some tips that may help:

1. Establish clear policies and procedures

It may be time to overhaul that employee handbook to add more comprehensive policies outlining expectations, confidentiality requirements and guidelines for handling proprietary information. That can help establish a company culture that prizes discretion and reduces the risk of unauthorized disclosures.

2. Use confidentiality agreements 

You would be remiss if you didn’t address your concerns with confidentiality agreements. Every partner, employee, contractor and influencer you work with should be asked to sign confidentiality agreements that pertain to your company’s trade secrets, client lists and other sensitive data. By defining exactly what constitutes confidential information and establishing consequences for unauthorized disclosures, everybody stays on the same page.

3. Improve access controls and security measures

You need to sharply limit access to sensitive information. Implement “need-to-know” policies and security measures like password protection, encryption, data logging and data loss prevention systems. Conduct regular security audits to look for unusual activity among employees that could indicate IP theft.

Finally, you may want to invest in legal guidance as you make the transition away from noncompetes and into this new era of doing business. When the rules are in flux, it can help to have a forward-thinking approach that will allow you to respond rapidly to any changes.