Non-Compete Law Updates

A case law every IT professional must read, understand and implement. Varun Tyagi, a skilled software engineer, worked on the POSHAN Tracker project, a high-priority initiative of the Government of India, through his employer, Daffodil Software Pvt. Ltd. Over time, thanks to his dedication and the company’s own training, he was promoted and made a lead developer on the project. After serving his full notice period and resigning properly, Varun received an offer to join Digital India Corporation (DIC), the very agency for which he was already contributing his work. This was a natural next step in his career. He accepted the offer and joined them. But what happened next is something many IT professionals never expect. Varun was dragged to court by his former employer. They claimed he had violated the non-compete clause in his employment agreement. According to the company, Varun couldn’t work with any of their clients or business associates, even after leaving the job, for the next three years. They claimed he could misuse confidential information, even though all intellectual property rights of the project belonged to DIC, not the company. The trial court sided with the employer and passed an order restraining Varun from working with DIC. Imagine leaving your job legally, only to be told by a court that you can’t join your new employer. Varun didn’t give up. He challenged the order before the Delhi High Court, and justice prevailed. On June 25, 2025, the Delhi High Court ruled in Varun’s favour and quashed the injunction. The court made it clear: 1. Any clause that restricts an employee from working elsewhere after resignation is void under Section 27 of the Indian Contract Act, 1872. 2. Companies cannot impose post-employment restrictions on someone’s right to earn a living. 3. Confidentiality concerns cannot be misused to block fair career progression. 4. Non-compete clauses that extend beyond the term of employment have no place under Indian law. Have you ever read the non-compete clause in your employment agreement? Chances are, it’s already there. In fact, almost all IT companies include such clauses in standard offer letters, and most employees, especially freshers and juniors, sign without knowing the legal consequences. This is where exploitation begins. Companies bank on your silence, your fear of legal trouble, and your unawareness. But the law is clear. Your right to earn, to switch jobs, and to grow cannot be curtailed just because you once worked with a client. Employees should read, question, and understand your employment terms. And more importantly, should know that the law is on your side. Your career is yours, not your former employer’s property. #ITEmployees #LabourLaw #NonCompeteClause #EmployeeRights #EmploymentLaw #DelhiHighCourt #RightToWork #KnowYourRights

Do you have a noncompete agreement at work? Depending on your job and responsibilities, it may soon become unenforceable—unless business groups successfully mount court challenges. The FTC's vote Tuesday to ban most noncompete agreements sets the stage for a fight between business groups such as the U.S. Chamber of Commerce, which has already said it will sue, and supporters of a national rule, which include union groups and the Biden administration. One key change in the final rule announced today, my Forbes colleague Maria Gracia Santillana reports, is that existing noncompetes for "senior executives" will be allowed to remain in effect, while those that currently exist for everyone else will be unenforceable. Newly established noncompete agreements will be banned for everyone after the rule becomes effective. My bet: We'll see lots of attempts to interpret the definition of "senior executive." The FTC, Maria reports, says the term “senior executive” refers to those earning more than $151,164 annually and who are in a “policy-making position.” For more on how the FTC defines that, check out Maria's story below. #noncompetes

Have you ever signed a noncompete agreement? You're not alone. In fact, 1 in 5 US workers have signed one. I myself have signed two in my career. One of them was so complex that the general counsel had to walk me through it line by line when my contract ended. However, the Federal Trade Commission (FTC) recently made a groundbreaking decision that will make it easier for professionals to leave their jobs and work for a competitor in the same industry. In a 3 to 2 vote, the FTC banned almost all noncompete agreements, which prevented employees from joining competing businesses. This new rule is estimated to affect 30 million employees who are currently bound to noncompete agreements. Interestingly, the U.S. Chamber of Commerce is looking into suing the FTC in order to prevent this new rule from being implemented. If you're one of the 30 million employees affected by a noncompete agreement, how would the noncompete going away change your career options? Let's discuss in the comments.

Noncompetes are now unenforceable! Well, that’s not quite true, despite the headlines. This is what is true, and is something I’m following as a lawyer who drafts/negotiates #noncompete provisions along with litigating them (I have 2 upcoming trials primarily focused on the enforceability of such clauses): On April 23, the Federal Trade Commission (#FTC) issued a final rule to ban many, but not all, #noncompetes across the United States. The rule isn’t effective until 120 days after publication in the Federal Register. So, don’t go to your boss’ office today, stick up your middle finger, and tell him or her to shove the noncompete where the sun doesn’t shine. Furthermore, there is an exception. Existing noncompetes for senior executives can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives. Additionally, there is a possibility that the rule never becomes effective. The expectation is that litigation will soon commence over whether the ban is proper, with a request that the FTC’s rule be stayed in the meantime. Importantly, whether or not the rule withstands challenge, there are mechanisms employers can use to protect their proprietary information, which they should be examining irrespective of the outcome. As the FTC has noted, secret laws and non-disclosure agreements (NDAs) both provide employers with well-established means to protect proprietary and other sensitive information. Some say NDAs aren’t worth the paper they’re printed on; I’m currently in the middle of a multi-million dollar case involving the breach of one, so we shall see! If you have any questions about the above, then feel free to contact me! https://lnkd.in/eihUvXP8

A Singapore High Court just ruled on a case that many workers have been quietly afraid of — and the implications go far beyond one company. If you’ve ever signed an employment contract and wondered, “If I leave, can they sue me?”, this is for you. Last week, the court decided a case between two SkillsFuture (WSQ) training companies. One company tried to sue: • its former staff for joining a competitor • the competitor for “copying” its business • and claimed ownership over roadshows, certificates, sales methods, even feedback forms The court dismissed the case — comprehensively. Here’s what it really means, in plain English. 1️⃣ Your employer doesn’t automatically own your skills The argument was: “We trained them. They shouldn’t work for competitors.” The court disagreed. Training someone in general job skills — sales conversations, explaining subsidies, running programs — does not give an employer control over their future. In Singapore: 👉 non-competes start on weak footing 👉 employers must prove a real proprietary interest 👉 general skills and experience belong to the worker So if you’re thinking: “If I leave, will I get sued?” Not just because you learned how to do your job. 2️⃣ If everyone can see it, it’s not confidential The company claimed copying because both sides: • ran roadshows • sold short courses • bundled programs • issued certificates • used QR codes for feedback The court was clear: These are common practices — not trade secrets. If it’s visible: • in malls • on websites • on social media it’s not confidential information. That’s competition — not theft. (Real secrets are still protected. Everyday business is not.) 3️⃣ Courts need proof, not suspicion Arguments like: • “they grew too fast” • “it looks similar” were rejected. Being upset isn’t evidence. Suspicion isn’t proof. 4️⃣ You can’t sue your way out of competition Courts will protect genuine secrets. They will not enforce fear. ~ Why this matters ~ This judgment affects: • SkillsFuture providers • SMEs • sales & marketing staff • trainers & educators • anyone uneasy about leaving a job It tells employers: 👉 Retain people because they want to stay — not because they’re afraid. And workers: 👉 You can move on. 👉 You can grow. 👉 You can compete fairly. ~ The bigger question ~ If Singapore depends on reskilling and career mobility, should we look more closely at how non-compete and “confidentiality” clauses are used against ordinary workers — especially when fear works long before court? 📌 FirstCom Academy (n.k.a. Skills Development Academy) v OOm Academy [2025] SGHC 266

Big news on noncompetes—from two very different directions. First, the NLRB just quietly backed off its aggressive stance that most noncompetes violate federal labor law. The agency's Acting General Counsel rescinded 2023's memo that took that position, signaling a retreat from treating noncompetes as an unfair labor practice. Meanwhile, Ohio lawmakers are headed in the opposite direction. Last month, they introduced SB 11, a bipartisan bill that would ban nearly all noncompetes in the state. If it passes, it'll be a game-changer, giving employees much more freedom to jump to competitors. The contrast is pretty stark. While the NLRB is easing up, state legislatures are doubling down on efforts to kill noncompetes. And it's not just Ohio—at least a dozen states, both red and blue, have already taken action to limit or ban them. What does this mean for employers? Don't assume noncompetes are going to stick around. Even if the NLRB is slowing its roll, the bigger trend is clear: these agreements are on the chopping block. Now's the time to rethink your approach to restrictive covenants. Here's my suggestion: 📃 If you're worried about protecting confidential information, a non-disclosure agreement (NDA) might be all you need. 📃 If you don't want employees poaching your customers, employees, or vendors, a non-solicit (plus an NDA) should do the trick. 📃 If an employee's role is so unique that their departure to a competitor would cause real damage, then—and only then—should you consider a noncompete (plus an NDA and non-solicit). The key is common sense. Don't overuse noncompetes just because you can. Tailor your agreements to what you actually need to protect. Otherwise, you're just throwing money away trying to enforce a contract that might not hold up in court. And while that's great for lawyers like me, it's terrible for your business.

Let's discuss yesterday's decision by a Texas federal judge to block the Federal Trade Commission's blunderbuss Rule, which imposes a comprehensive ban on most non-competes. 𝗪𝗵𝘆 𝗱𝗶𝗱 𝘁𝗵𝗲 𝗝𝘂𝗱𝗴𝗲 𝗯𝗹𝗼𝗰𝗸 𝘁𝗵𝗲 𝗥𝘂𝗹𝗲? When parties seek the type of equitable relief sought here, they must establish that they are likely to succeed on the merits, irreparable harm will result without the issuance of injunctive relief, and the balance of harms and public interest weigh in favor of granting injunctive relief. Here, the court concluded that the plaintiffs in the lawsuit, a Texas business and various employer associations, successfully established all three. On the merits, the court reasoned that the FTC has "some authority" to create "housekeeping rules" to preclude unfair methods of competition. However, Congress did not bestow it with "unlimited power" and certainly did not afford the FTC statutory authority to create substantive rules, like one that effectively bans most non-competes. The court also blocked the Rule because it is "arbitrary and capricious." An agency rule is arbitrary and capricious if it "offered an explanation for its decision that runs counter to the evidence before the agency." Here, the court concluded that the Rule, which "imposes a one-size-fits-all approach with no end date" without sufficient consideration of reasonable alternatives, was "unreasonably overbroad without a reasonable explanation. Additionally, "the Commission's lack of evidence as to why they chose to impose such a sweeping prohibition...instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious." The court blocked the Rule because, otherwise, the plaintiff would endure nonrecoverable costs of complying with a putatively invalid regulation and, thus, endure irreparable harm. "Further, the Rule makes unenforceable long-standing contractual agreements that have been judicially recognized as lawful and beneficial to the public interest." 𝗔𝗻 𝗶𝗻𝗷𝘂𝗻𝗰𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗺𝗲, 𝗯𝘂𝘁 𝗻𝗼𝘁 𝗳𝗼𝗿 𝘁𝗵𝗲𝗲. Maybe you were hoping to read that the judge blocked the FTC's Rule for everyone. She didn't. Judge Brown passed on entering a nationwide injunction. Instead, she limited the relief to the plaintiffs themselves—not even the associated members of the plaintiff-employer organizations. 𝗪𝗵𝗮𝘁'𝘀 𝗻𝗲𝘅𝘁? This is a "preliminary" injunction. The next milestone involves the court ruling on the merits of the case by August 30, when the judge may expand the scope of the relief she afforded. In the meantime, another case like this one is pending in the Eastern District of Pennsylvania, where the judge will rule on a similar injunction request this month. The net-net is that the FTC Rule, which takes effect on September 4, 2024, still breathes. But barely. #TheEmployerHandbook #employmentlaw #humanresources

Right as Eric Meyer and I were discussing whether and when a federal judge would rule on the challenge to the #FTC ban on #noncompetes yesterday, as promised, she did just that. Federal Judge Ada Brown granted the plaintiffs’ preliminary injunction against the FTC ban—but only as to corporate parties as employers themselves. Judge Brown noted that while this order is preliminary, the court would rule on the ultimate merits of the action on or before Aug. 30, 2024. In a nutshell, the court agreed that the FTC’s statutory authority for promulgating the Rule did NOT authorize substantive rulemaking, which is what the FTC ban purported to do. Judge Brown reasoned that a plain reading of the FTC Act did not grant the FTC the authority to issue substantive rules regarding unfair methods of competition. And, a different section limited the FTC’s ability to make rules dealing with unfair or deceptive practices—not unfair methods of competition.  Thus, the court concluded that while the FTC had some authority to promulgate rules to preclude unfair methods of competition, but not enough—it lacked the authority to create substantive rules through this method. So, plaintiff was likely to prevail on the merits. Preliminary injunction granted. Moreover, because the FTC is an administrative agency, the Administrative Procedure Act’s “arbitrary and capricious” standard limits the FTC ban. The court deemed the ban to be “unreasonably overbroad without a reasonable explanation. It imposes a one-size-fits-all approach with no end date, which fails to establish a ‘rational connection between the facts found and the choice made.’” Because the FTC could not demonstrate why they needed such a broad prohibition on noncompetes, rather than targeting specific ones, the Rule was arbitrary and capricious. And...the court found that the plaintiffs prevailed on the remaining requirements to obtain preliminary injunctive relief as well. What does this mean? Right now, not a ton to most of the country. Judge Brown limited the scope of the injunction. ❖ First, she refused to consider the facts before her as an “appropriate circumstance” that would merit nationwide relief. This is especially so when the parties agreed that 46 states have varied case law and statutory schemes to address non-competes! ❖ Second, Judge Brown determined that recent precedent supported limiting injunctive relief to only the “plaintiffs” before the Court and not “universal” or “nationwide” injunctive relief. She reasoned that Plaintiffs offered no briefs detailing how or why nationwide injunctive relief would be necessary for these plaintiffs at this preliminary stage. ❖ And, to the extent that the Chamber of Commerce appeared to argue it had “associational standing” on behalf of its members, it failed to brief that argument. Watch for Judge Brown’s final merits ruling by August 30, 2024, which is likely to block the FTC ban in the Northern District of Texas. #emplaw

Why your next HR decision could be an antitrust issue 👇   The European Commission last week published a policy brief assessing the harmful effects of #wagefixing and #nopoach agreements 🤝, and signalling their priority on its enforcement agenda. 'No-poach' agreements restrict companies from hiring each other's staff, while in 'wage-fixing' agreements employers agree to set wages at the monopsony level.   The Commission’s stance is that these agreements, typically, qualify as restrictions by #object under Article 101(1) TFEU 🚨 and are unlikely to be justified by a net efficiencies defense. The Commission regards labour market agreements as akin to a buyers’ #cartel, categorizing wage-fixing as purchase price fixing 💰 and no-poach as a form of supply-source sharing 🔗. It contends that even if legitimate objectives exist for such practices, they can be achieved by less #restrictive means such as NDAs or minimum employment commitments. The Commission concludes that these practices not only stifle competition but also #harm employees by suppressing wages and curtailing mobility, ultimately hindering innovation and economic growth 📉. This stance follows the Commission’s November raids on food delivery companies Delivery Hero and Glovo for their involvement in no-poach agreements (although no decision has yet been adopted).🕵️♂️ 🍔   Meanwhile, across the Atlantic, on April 23, the Federal Trade Commission issued a bold rule #banning (!) non-compete clauses ⛔ across all sectors (except for the highest-paid executives), with the enforcement date set for 120 days following the rule's publication. This significant step forward, recognizing the anti-competitive effects of restrictions in labor markets in the US 🇺🇸, however, did not go unchallenged. Within less than 24 hours, it was met with #legal challenges from the US Chamber of Commerce and the Business Roundtable, which may delay the rule's enforcement.   At CompLaw: Advanced EU conference in London organized by Informa Competition Law which I had a pleasure to attend, amongst many expert discussions, the national competition authorities also highlighted their enforcement #priorities. The focus on labour markets was clear. The UK’s competition authority 🇬🇧 pointed out that no-poach agreements is focus priority (2 investigations opened in the television production sector 📺 and one in the fragrance sector, and further actions anticipated). Similarly, the Portuguese authority 🇵🇹 emphasized its ongoing commitment to labor markets, showcasing its past successes in reaching #settlement decisions in this matter.   Regulatory bodies worldwide are prepared to take significant actions to ensure fair competition in labor markets👷♂️🌍 . For companies this means a pressing need to reassess their HR strategies and #employment practices 📝. 

FTC Abandons Effort to Ban Noncompete Agreements Good news for employers. The Federal Trade Commission (FTC) has voluntarily dismissed its appeal of federal court decisions in two states that blocked enforcement of its Final Rule banning noncompete agreements nationwide. This development effectively ends the FTC’s attempt to impose a categorical ban on noncompetes through agency rulemaking. In April 2024, the FTC issued a Final Rule prohibiting most noncompete agreements between employers and employees. The agency argued that such agreements constitute an unfair method of competition under Section 5 of the Federal Trade Commission Act. Almost immediately, the Final Rule was challenged in multiple federal courts by business groups and employers. Two courts—one in Texas and another in Pennsylvania—issued rulings enjoining the FTC from enforcing the Final Rule within their jurisdictions. The FTC filed appeals in both cases. However, in early September 2025, the FTC voluntarily dismissed those appeals, thereby leaving the adverse rulings in place. The FTC’s decision to abandon its appeals signals the end of its effort to ban noncompetes nationwide via rulemaking. Employers can therefore expect the following: Employers can expect the following: (i) the agency’s rule will not take effect, and no nationwide prohibition on noncompetes will be implemented by the FTC, and (ii) noncompete enforceability remains governed primarily by state law. While some states (e.g., California, Oklahoma, North Dakota, Minnesota) broadly prohibit noncompetes, others continue to permit them subject to reasonableness tests. Key takeaways for employers? Employers may continue to use noncompete agreements where permitted under applicable state law. Businesses should nonetheless review existing restrictive covenant agreements (noncompetes, nonsolicitation, confidentiality agreements) to ensure compliance with state requirements. Employers operating in multiple jurisdictions should remain attentive to the evolving patchwork of state laws regulating restrictive covenants. For those that don't know, Florida has one of the most employer-friendly non-compete statutes in the country.