Employee noncompete agreements are used by some staffing firms, but such contract language has come under fire as of late. The Federal Trade Commission issued a ban that was rejected by district courts, and those decisions are under appeal. In addition, General Counsel Jennifer A. Abruzzo of the National Labor Relations Board wrote a memo on May 30 stating noncompetes can violate the National Labor Relations Act and took a critical look at stay-or-pay provisions on Oct. 7. However, experts believe the next Trump administration will rethink the issue.

It’s likely there be a shift away from a focus on noncompetes, Rebecca Bovinet of law firm Fisher & Phillips said in an interview with SIA.

“We’re going to see likely more employer-friendly standards come back into play as we did with his initial administration,” Bovinet said.

She anticipates the next administration will reverse course on the efforts of the FTC and the NLRB.

Still, concerns over noncompetes will not go away, Bovinet said. There will continue to be a patchwork of requirements among states.

Even before the FTC’s noncompete ban, some states, such as California, had already prohibited noncompetes.

Staffing firms, especially those with operations in multiple states, need to be cognizant of the different rules, Bovinet said. Outside legal counsel can help prevent firms from running afoul of state requirements. In addition, regulations at the city and county levels matter when it comes to compliance in general.

Others have also indicated the FTC’s national rule prohibiting noncompetes will likely go away.

“Spoiler alert: Things look bleak for the rule’s supporters,” attorney Greg Care of Brown, Goldstein and Levy wrote in a blog post.

Noncompete clauses typically prohibit workers from taking a new job or starting a new business that competes with their current employer for a period of time and within a set geographic area after they leave employment. The FTC said an estimated 30 million workers in the US are subject to noncompete clauses. However, the ban caused concern in the staffing industry.

Eventually, the FTC’s national ban on noncompetes was rejected by judges in Texas and Florida this year and is presently not in effect. Still, appeals have been filed in both instances. Bovinet noted the legal fight would be an uphill battle even if the appeals were to proceed.

State Rules

Already, a number of states ban or restrict noncompete agreements. A legal filing by attorneys general from several states touched on the state-by-state regulation. The filing — part of an effort to support the FTC ban — noted that 40 states and the District of Columbia restrict the use of noncompetes. Those restrictions range from outright prohibitions to protections for a specific subset of workers or industries. Other states apply common-law “reasonableness” tests to invalidate unfair or exploitative language, it said.

Four states have banned noncompetes outright, according to the filing: Minnesota, North Dakota, Oklahoma and California, the latter of which has banned them since 1872. Nine states and the District of Columbia have legislation prohibiting noncompetes for workers earning below a set amount. Other states use different tactics.

Employers need to be aware of the risks and trends, Fisher & Phillips’ Bovinet said.

“They need to be educated on what’s going on so they can work with counsel [and] review their policies, procedures and contracts to ensure that risk is minimized,” she said.