Non-compete Rule Blocked; Watch Other Forces on Restrictive Covenants

A court has blocked the Federal Trade Commission’s (FTC) non-compete rule that threatened to invalidate contract terms many healthcare practices and health systems use. McCarter partner Khaled Klele spoke with Part B News and explained that just because the FTC rule is out of the way for now, there are still common legal standards that need to be met. “You still have to comply with state law or common law in enforcing [covenants] and it’s not a straight-up contractual analysis,” Khaled said. “A different standard applies to non-competes. An employer has to prove that the non-compete protects a legitimate business interest, the employer will suffer irreparable harm, and the balance of equities weighs in the employer’s favor, and that the non-compete is not against public policy.”