ARTICLE | Politics, Policy & Law

FTC’s non-compete proposal could have unanticipated effects for biotech 

Biotech may not need non-competes, but ban could affect NDAs

January 19, 2023 1:02 AM UTC

The FTC’s proposed rule banning non-compete agreements could have implications that go far beyond the ability of companies to prevent employees from taking jobs at their competitors, including potentially restricting the enforcement of non-disclosure and non-solicitation agreements, attorneys specializing in labor law told BioCentury.

A non-compete is a clause in an employment contract that restricts the ability of the employee to work for a competitor company in a certain industry, geographic area, or time frame. A decades-old natural experiment suggests their enforceability may not critically affect biotech — California has outlawed them since 1872, whereas they are allowed for senior executives in Massachusetts and most other states. Oklahoma and North Dakota also prohibit non-competes...