Federal and State Officials Increase Scrutiny of Non-Compete Agreements
New York Attorney General Eric T. Schneiderman (the “NYAG”) recently announced the resolution of separate inquiries into two employers’ alleged misuse of employee non-compete agreements. The NYAG’s June 2016 settlements with legal publisher Law360 and sandwich chain Jimmy John’s come against a backdrop of heightened scrutiny of non-compete agreements by both federal and state agencies, particularly with respect to employers’ use of restrictive covenants for low level employees. Within the last several months, the Illinois Attorney General filed a lawsuit against Jimmy John’s over its use of non-competes, and the U.S. Treasury Department’s Office of Economic Policy and the White House each published a critical report discussing the adverse economic impact on the workforce of non-compete agreements and related issues. In light of these activities, employers may consider it an appropriate time to review their existing non-compete arrangements.