DOJ Encourages State Court to Consider Antitrust Principles to Invalidate Non-Compete Agreements

Non-compete agreements between employers and their employees traditionally are governed by state law. But that did not stop the Antitrust Division of the Department of Justice (DOJ) from recently filing a statement of interest encouraging a Nevada state court to consider federal antitrust principles to invalidate non-compete agreements between a large medical group and its physician-employees. Taken together with other recent actions by the president and federal enforcement agencies, the DOJ’s decision to file this statement signals a more aggressive approach to non-compete enforcement at the federal level.

The state and federal laws governing non-compete agreements are nuanced and complex, and their application involves a fact-intensive inquiry into the individual markets involved. While it is not yet clear how much the Biden administration and its enforcement agencies will wield the power of the antitrust laws to curb the use of non-competes, businesses should nonetheless consider involving antitrust counsel to assess the potential competitive impact of proposed non-compete provisions in their employment agreements, particularly where businesses have significant market share.

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