The Department of Justice (DOJ) and federal government continue to aggressively pursue antitrust violations and promote the federal government’s interest in heavily limiting the use of non-competition agreements.  While the DOJ has recently been unsuccessful in its target of “no poach” and “no hire” agreements and wage-fixing issues in antitrust trials, employers should not interpret this as a sign the government will back off its efforts to limit the use of non-competition agreements by employers across all industries.  

With the DOJ taking a more active role in prosecuting antitrust matters, there is a real risk antitrust claims will increasingly gain traction in restrictive covenant litigation.  In fact, the DOJ recently filed a Statement of Interest in a Nevada state court case regarding the enforceability of post-employment restrictive covenants of anesthesiologists.  The DOJ encouraged the state court to consider antitrust principles when evaluating the restrictive covenants, and further asserted its position that post-employment restrictive covenants may constitute impermissible restraints of trade under the Sherman Act, while providing a roadmap for the court to declare the agreements unenforceable on this basis.

While the validity of non-competition agreements currently remains controlled by state law, the federal government’s attention to such agreements may ultimately limit the use of such agreements to situations where the agreement is truly necessary to protect a well-defined category of trade secrets.  Employers should keep this in mind when preparing new agreements and take the time to carefully evaluate existing non-compete agreements and hiring practices to determine any potential issues.  And, for employers who have or are contemplating “no hire” agreements with competitors, it is wise to consider how these may be scrutinized if challenged.