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With a Proposed Ban on Non-Competes, Will NDAs Be Next on the Chopping Block?

That’s a real possibility, according to some employment attorneys and regulatory experts, with the push potentially coming from state attorneys general rather than the federal government.

By Hugo Guzman | February 07, 2023 at 08:02 AM
Stock photo: Non Disclosure Agreement. Credit: ThreeRivers11/Shutterstock.com

Non-compete agreements are under assault, courtesy of the Federal Trade Commission (FTC), which rolled out a proposed ban last month. Will non-disclosure agreements, or NDAs, be the next business tool to draw regulators’ ire? That’s a real possibility, according to some employment attorneys and regulatory experts, with the push potentially coming from state attorneys general rather than the federal government.

“From a regulatory perspective it’s a logical extension of the restrictions … that the federal government is enacting,” says Stephen Piepgrass, a partner at Troutman Pepper Hamilton Sanders. “State attorneys general are the ones who tend to push the regulatory envelope and look for new legal theories to bring consumer protection claims. This is very much in line with that.”

Non-disclosure agreements already are under attack in narrow circumstances. Just last month, for instance, President Joseph Biden signed the Speak Out Act, which prevents the enforcement of NDAs in instances of sexual assault and harassment. Introduced in July by Senator Kirsten Gillibrand, D-New York, the measure follows similar legislation passed in states such as California, Washington, and New Jersey.

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