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What are the effects of a ban on non-compete agreements?

On Behalf of | Aug 3, 2021 | Business Disputes |

On July 29th, 2021, President Joe Biden signed an executive order that has an overall goal of promoting competition within the United States economy. One of the points in this executive order was the ban or limitation of non-compete agreements for workers in Texas and the rest of the United States. While some people are happy with Biden’s order, others point out the negative effects this order could have on companies.

Difficult to keep confidential information secret

Some people feel that a ban on non-compete agreements would make it hard for companies to protect their most valuable information. To be more specific, they warn that many employees can transfer confidential information without transferring documents, electronic files, or anything that can get tracked.

Going through expensive lawsuits

Another potential problem with banning non-compete agreements is that the cost to resolve these types of business disputes could get expensive. If a ban on non-compete agreements happens, companies will most likely have no choice but to depend on trade secrets misappropriation laws. Lawsuits involving violations of these laws can get time-consuming and expensive.

Making it hard to provide a burden of proof

One other problem that employers will deal with after a ban on non-competition agreements is establishing proof their companies’ information got stolen. It’s almost impossible for a company to prove that someone leaked its information because no one will know if it’s happening. All this company might know is that one of their former employees is working for a competitor.

Soon, employers throughout the country might no longer be able to use non-compete agreements. While this new environment could be beneficial for employees, there could be many headaches ahead for businesses.