During the recent Employment Law Symposium hosted by Ward and Smith, attorneys from the firm addressed pressing legal challenges facing employers today. The event provided a detailed analysis of significant changes in laws related to Immigration and Customs Enforcement (ICE), the enforcement of restrictive covenants, the safeguarding of trade secrets, and compliance with Diversity, Equity, and Inclusion (DEI) programs.
Restrictive Covenants: Current Landscape
One of the key topics discussed was the evolving landscape of noncompete agreements. According to Emily Massey, a North Carolina State Bar Board Certified Specialist in Employment Law, a recent federal court decision has preserved the status quo regarding these agreements. “The Federal Trade Commission (FTC) had implemented a regulation banning most forms of noncompete agreements in the US. However, a federal judge in Texas has halted this ban,” Massey explained.
This ruling, following an appeal lodged by the FTC under the previous administration, has left many employers questioning the future of noncompete agreements. Massey noted that the new administration has not yet withdrawn the appeal, though she anticipates that it will happen. In a significant development, shortly after her presentation, the Trump administration indeed dropped the appeal.
Massey also pointed out that the National Labor Relations Board (NLRB) is expected to scrutinize noncompete agreements less rigorously, particularly with the appointment of a new General Counsel who rescinded multiple prior memoranda. Currently, the trend among states is to limit the use of noncompete agreements. Notably, only Florida has recently enacted laws that are more accommodating toward these agreements.
Virginia has taken a decisive step by prohibiting noncompete agreements for non-exempt employees entitled to overtime under the Fair Labor Standards Act. Additionally, around ten states have recently introduced laws restricting noncompete agreements specifically for physicians and healthcare professionals. This growing legislative focus has raised employee awareness regarding their rights, prompting legal experts to advise employers to reassess their noncompete agreements to ensure they are narrowly tailored.
Protecting Trade Secrets in Today’s Environment
The discussion also delved into the protection of trade secrets, a critical concern for many businesses. Gavin Parsons, a litigation attorney specialized in commercial law and intellectual property, emphasized that the definition of a trade secret is broad and encompasses any information that has economic value and is kept confidential. “Trade secrets do not expire like patents; the only requirement is that the information must be valuable to the business,” he stated.
Parsons noted that companies are increasingly recognizing the importance of trade secret protection as noncompete agreements face greater restrictions. With employees now able to change jobs more freely, organizations must adopt proactive measures to safeguard sensitive information. He highlighted that technological advancements make it easier for individuals to misappropriate confidential information, particularly in a remote work environment where employees may feel less monitored.
To mitigate risks, Parsons recommends that companies implement clear policies during the onboarding process, detailing how to store and handle confidential information. Monitoring the digital environment where sensitive data is stored can help detect unusual activities that may signal potential breaches.
The conversation also touched upon the implications of artificial intelligence (AI) for trade secret protection. Parsons explained that while generative AI does not have access to proprietary information unless provided, organizations should remain cautious. It is advisable to prohibit employees from sharing trade secrets with external AI programs and to limit the use of AI to internal applications.
As the legal landscape continues to evolve, especially concerning AI and data protection, employers are encouraged to maintain regular contact with legal counsel to stay informed about best practices and compliance requirements. The symposium underscored the importance of adapting to these changing dynamics, ensuring that businesses can effectively navigate the complexities of employment law.
