Frank Paganelli was quoted in an October 26 GeekWire article titled “Calling for Reform, Obama Administration Says There Is ‘Gross Overuse of Non-Compete Clauses.’” The article was in response to The White House’s Call to Action on Non-Compete Agreements, which asked state lawmakers to consider reforms “to reduce the prevalence of non-compete agreements that are hurting workers and regional economies.” The White House included the following recommendations: 1) ban non-compete clauses for categories of workers; 2) improve transparency and fairness of non-compete agreements; and 3) incentivize employers to write enforceable contracts and encourage the elimination of unenforceable provisions. Paganelli commented on the current state of non-competes and their enforceability.
“Non-competes can and do serve the valid purpose of protecting companies’ proprietary information and trade secrets,” said attorney Frank Paganelli, who serves as chair of Lane Powell’s Startups and Emerging Companies Practice Group. “That said, over the years their use has become nearly ubiquitous, their reach overbroad, and the benefits offset by the resulting limitations on free entrepreneurship.”
Courts tend to limit the enforceability when legal action is taken over non-compete agreements, a trend Paganelli says makes sense. To accompany today’s best practices announcement, the White House issued a state-by-state report detailing the enforceability of non-competes and providing other relevant information for workers.