Professor Camilla Hrdy’s article cited in FTC ruling

Professor Camilla Hrdy’s article, “Beyond Trade Secrecy: Confidentiality Agreements That Act Like Noncompetes,” was cited in the Federal Trade Commission’s recent ruling banning most noncompete agreements entered between employers and workers.  Hrdy’s article, which is co-authored by Prof. Chris Seaman at Washington and Lee, was just published in the Yale Law Journal. The article shows that confidentiality agreements (also called nondisclosure agreements, or “NDAs”) can sometimes act like noncompete agreements, when they are drafted so broadly that they effectively prevent workers from working in the same field after they leave their job.  A confidentiality agreement, in theory, does not prevent competition per se.  It only prevents disclosure and use of certain information. But the article shows that many so-called confidentiality agreements cover so much information that it would be difficult if not impossible for workers to avoid using or sharting covered information, and thus being in breach of the agreement, when they leave their job. The article shows that some courts have begun to call out these “de facto” noncompetes, finding them unenforceable under their jurisdictions’ noncompete regulations. The FTC’s rule specifically highlights the potential negative effects of overbroad nondisclosure agreements in its new noncompete rule, citing to Prof. Hrdy’s article. 

 

Prof. Hrdy’s article is available online on the Yale Law Journal’s website.

 

Prof. Hrdy has also published a short summary of the article’s key findings on ProMarket.