Protecting Your Business After the FTC Non-Compete Ban
The FTC has shocked business owners everywhere by banning non-compete agreements. That ban will go into effect in September 2024.
But you CAN actually protect the most valuable parts of your business without a non-compete clause.
I’m Maria Spear Ollis, aka The Lunar Lawyer, and I’m going to shine some light on 3 easy ways that you can protect your business without a non-compete clause.
Option 1: NDA or Confidentiality Clause
The biggest misconception about this whole thing is that your entire non-compete agreement is now…trash. That might not be true if it’s part of a broader employment or contractor agreement.
And one of the most common (and most effective) clauses? A confidentiality clause.
Confidentiality clauses protect… wait for it… your confidential information.
What types of information can be “confidential?”
Things like:
Client contact information
Customer purchase history
The fact that the client IS your client
Your internal training manual
…so long as your contract is specific as to what actually constitutes “confidential information.”
You can see how a non-compete has nothing to do with protecting confidential info!
Option 2: A Non-Solicitation Clause
A non-solicitation clause prevents the signer from soliciting your clients or team members.
In other words, it says:
YOU CAN’T TAKE MY CLIENTS OR TEAM MEMBERS AWAY FOR X AMOUNT OF YEARS AFTER WE FINISH WORKING TOGETHER.
WHAT’S THE DIFFERENCE BETWEEN NON-SOLICITATION AND NON-COMPETE?
A non-compete clause prevents you from working for a competing business. (This is the clause that’s going bye-bye in September 2024.)
A non-solicitation clause prevents you from stealing away my clients or my team members.
See the difference?
Option 3: An Intellectual Property or Work-for-Hire Clause
You knew I was going to talk about IP, didn’t you?
Your IP — intellectual property — is probably the most valuable part of your business.
And in every single team member contract, there should be a clause that dictates who owns the IP that’s created while this team member works with you.
It can include things that they create from scratch.
It can include things that they create from your instructions.
It can include things that they edit.
But it should make clear that your IP is YOUR IP, even if that team member works on it or creates it for your business.
So in terms of protecting your business without a non-compete…
You can (and should!) utilize Option 1 (a confidentiality clause) Option 2 (a non-solicitation clause) and Option 3 (an intellectual property clause) with team members as appropriate.
And if you need a solid, customizable Independent Contractor Agreement that incorporates all of these elements, look no further than The Legal Apothecary Library! Filling out and customizing your team member agreement can be as easy as answering a few yes/no and multiple choice questions.