The Law Journal’s Editorial Board recently wrote (in a commentary titled “Valid Reasons for Noncompete Clauses“) that, in essence, restrictive covenants are not that bad, and criticized President Biden’s Executive Order asking the Federal Trade Commission to question their use by employers. Clearly, most if not all the members of the Editorial Board have never represented clients who, once discharged, find it hard to obtain employment due to vindictive and draconian restrictive covenants.
While there may be times when restrictive covenants are necessary (someone who has been involved in the strategic development of a project, and then attempts to move to a competitor), these instances are extremely rare. Employers are using these restrictive covenants more and more to prevent their former employees from obtaining jobs in the same industry, not for fear that the employee is going to reveal some secret or steal customers, but merely because they can. There was a case involving the sandwich franchisor, Jimmy Johns, who attempted to prevent their employees (sandwich makers) from moving to other similar franchises. What makes matters worse is the fact that in this world of conglomerates, many of these restrictive covenants contain language that covers not only the actual employer but also any affiliate, customer, or supplier of the employer.