USA – D.C. METROPOLITAN AREA Trends and Developments Contributed by: Linda M. Jackson, Andrew Baskin, Pascal “Pat” Naples and John M. Hindley, ArentFox Schiff LLP
Protecting Trade Secrets in the Face of Narrower Non-Compete Enforceability For decades, non-competes served as a crucial tool for protecting trade secrets, but recent federal exec - utive action, legislation, and judicial decisions have altered the legal landscape. With respect to the federal government, the FTC pur - sued and then abandoned its attempted nationwide ban on non-competes. That said, the FTC remains engaged in selective enforcement litigation. To that end, the FTC launched a Joint Labor Task Force in February 2025, held a non-compete workshop in January 2026, and has issued warning letters to large healthcare employers advising them to audit their non-competes. State-level legislation has created an increasingly difficult legal landscape. In 2025 alone, at least 11 states enacted non-compete restrictions. Currently, DC imposes income thresholds, position restrictions, notice requirements, and durational limitations on non-competes; Maryland imposes income thresholds and restrictions specific to healthcare providers and veterinarians; and Virginia imposes income thresholds and, starting 1 July 2026, will broadly ban non-com - petes, except if termination is for cause or the non- compete provides for severance. Meanwhile, some courts have grown increasingly unwilling to “blue pencil” overbroad provisions to save them from invalidity. Given these developments, businesses should con - sider alternatives to non-competes in safeguarding their trade secrets. Below, we examine several such strategies. Confidentiality and nondisclosure agreements Confidentiality and nondisclosure agreements (NDAs) remain broadly enforceable and may be expressly exempted from state-level non-compete restrictions. To maximise their protective value, businesses should define with specificity the categories of confidential information – such as customer lists, pricing strate - gies, proprietary formulas, and research data – rath - er than relying on vague, overbroad definitions that courts may deem unenforceable. NDAs should clearly
articulate an employee’s obligations during and after employment, including the duty to return or destroy confidential materials upon departure, and should establish ongoing confidentiality obligations that sur - vive termination where appropriate. When properly drafted, NDAs provide robust trade secret protection without the enforceability risks increasingly associ - ated with non-competes. Non-solicitation agreements Depending on the state, non-solicitation agreements – which restrict a departing employee’s ability to solicit the former employer’s clients, customers, or employees – may be viewed more favourably than non-competes because they do not prevent an indi - vidual from taking another job. To enhance enforce - ability, businesses should limit restrictions to clients or client prospects with meaningful relationships with the departing employee, or existing clients, prospects, or employees about whom they may have proprietary Forfeiture-for-competition provisions condition the receipt of certain benefits, like deferred compensation, equity, or severance, on compliance with non-compe - tition obligations. Because the employee retains the freedom to compete, and simply faces a financial con - sequence for doing so, courts have been less hostile to these provisions. Businesses using this approach should ensure the provision applies to a meaningful benefit, clearly defines competitive activity, and speci - fies the time period and consequences of a violation. Tailoring agreements to jurisdiction-specific requirements information – eg, compensation details. Forfeiture-for-competition provisions One takeaway from the foregoing discussion is the significant variability across jurisdictions in enforcing restrictive covenants. In some states, non-solicitation provisions may be viewed, either by statute or based on precedent, in the same manner as non-compete provisions. In other states, the same may be true of forfeiture-for-competition provisions. Still other states might treat both of those provisions as distinct from non-competes. Given this variability, employers with employees in multiple states must tailor their employ - ment agreements to the appropriate jurisdiction; a one-size-fits-all approach can be fraught.
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