FTC to Eliminate Noncompetition Agreements?

The Federal Trade Commission (FTC) is considering passing a rule that would eliminate noncompetition agreements, also known as noncompete clauses, which are often included in employment contracts. These clauses prevent workers from leaving their current job and immediately competing with their former employer.

California has already banned noncompetition agreements, and several other states, such as Oklahoma, Virginia and North Dakota, have imposed certain restrictions on their use. These states have recognized the potential negative impact noncompetition agreements can have on workers, such as limiting their mobility and hindering their ability to find new employment.

While we wait to see what the FTC ultimately decides, it is important to note that existing noncompetition agreements may still be enforceable, even if the FTC passes a rule banning them. It is important for individuals who have signed noncompetition agreements to review them now to ensure that they are assignable to successor entities.

The enforceability of non-competition agreements when they are assigned from one employer to a successor entity can be a complex issue.

In the event that an employer sells all of its assets to a successor entity, the question arises as to whether the noncompetition agreements signed by the employees of the original employer are still enforceable. The answer to this question depends on several factors, including the specific language of the noncompetition agreement and the laws of the state in which the agreement was signed.

In general, noncompetition agreements are more likely to be enforceable if they are reasonable in scope and duration. This means that they should not be overly restrictive in terms of the types of activities that are prohibited or the geographic area covered by the agreement. Additionally, the agreement should not extend for an unreasonable amount of time.

When it comes to the assignment of noncompetition agreements from one employer to a successor, there are a few key considerations. First, it is important to determine whether the noncompetition agreements are assignable. This can usually be determined by looking at the language of the agreement itself. If the agreement is silent on the issue of assignment, it may be up to a court to decide whether the agreements are assignable.

Another important consideration is whether the successor entity has a legitimate business interest in enforcing the noncompetition agreements. This can be the case if the successor is taking over the same line of business as the original employer and is concerned about protecting its own trade secrets and confidential information.

The enforceability of the assignment of noncompetition agreements from one employer to a successor that buys all of the employer’s assets can be a complex issue. It is important to carefully review the language of the agreements and to consider the relevant state laws when determining whether these agreements are enforceable in a given situation.

Overall, the potential elimination of noncompetition agreements by the FTC could have significant implications for both employers and employees. It remains to be seen how this potential rule change will play out, but it is certainly worth keeping an eye on for those who are affected by these types of agreements.

Changes in Federal and State Estate Tax Exemptions

As the new year begins, it is important to note the significant changes to the federal and state estate tax exemptions. These changes have the potential to greatly impact the tax liability of estates and the distribution of assets upon the death of a loved one.

First and foremost, the federal estate tax exemption for decedents dying in 2023 has been increased to $12,920,000, a notable increase from $12,060,000 in 2022. This means that individuals will be able to pass on more of their assets to their loved ones without incurring estate taxes at the federal level. However, it is important to note that state estate tax exemptions may vary and may not align with the federal estate tax exemption. For example, Maryland residents will have a state estate tax exemption for decedents dying in 2023 that remains at $5,000,000. This is a significantly lower amount compared to the federal estate tax exemption, and as such, Maryland residents will need to be mindful of the potential state tax liability when planning their estates.

On the other hand, residents of Virginia will not have to worry about state estate taxes as the Virginia estate tax was repealed in 2007. As a result, the federal estate tax exemption will be the only one that applies to them, providing them with a higher level of flexibility in terms of estate planning. Residents of Washington DC will have to wait for the estate tax exemption to be released for 2023. In 2022, the DC estate tax exemption was $4,254,800.00. We anticipate that the 2023 estate tax exemption will be adjusted for inflation, which means that it will likely be higher than the 2022 exemption.