Aug 15, 2022

Another Non-Compete and Non-Solicitation Agreement Bites the Dust

In American employment law, the majority of non-compete and non-solicitation covenants have traditionally been governed by state common law. Many states have set the bar low for when a non-compete or non-solicitation covenant is enforceable. Generally, a non-compete or non-solicitation agreement is enforceable if the employee receives “something of value” in return for accepting restrictions on the employees’ rights after the employment relationship has come to an end (non-compete or non-solicitation).

Now, the tide seems to be changing, and in the past several years, state and federal legislatures have enacted statutes to restrict or limit the use or enforceability of non-compete and non-solicitation covenants in employment relationships. One of the factors contributing to this trend was President Biden’s executive order on “Promoting Competition in the American Economy”. The order, among other things, encouraged the Chair of the Federal Trade Commission to exercise its statutory rulemaking authority to constrain unfair use of non-compete and non-solicitation clauses in employment.

Danish companies operating in the U.S. should be careful when trying to implement non-compete or non-solicitation clauses for U.S. employees. In particular, using standard Danish / International employment agreements for employment across the U.S. is likely to run into challenges in several states.

For questions about this article, please contact the author, Daniel Emil Lindberg Bang.
Advokat, LL.M. (Denmark)
Attorney at Law (New York)
T: (+45) 5126 5330

Daniel Emil Lindberg Bang is an Attorney for Thomas Thorup Law. He is based in Copenhagen.