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Are non-competes no longer allowed in Alaska?

On Behalf of | Jun 17, 2024 | Employment Law

Non-compete agreements have long been a controversial topic. Historically, Alaska courts upheld the enforceability of reasonable non-competition agreements, but our courts stressed the need for careful scrutiny due to concerns over unequal bargaining power. The federal government has now stepped in to ban even this reasonableness standard that was balanced against employee interests.

New rule’s nationwide impact

Recently, the Federal Trade Commission implemented a final rule nationwide that effectively bans non-compete agreements for the majority of workers. This means that non-competes will no longer be enforceable for most workers.

This rule will most likely be challenged in court and could possibly be overturned. In addition, future administrations could change the rule over time.

Exceptions to the rule

Under the FTC’s rule, non-compete agreements can still be enforced for senior executives. These senior employees make up a very small fraction of the workforce in Alaska (less than 0.75%), but non-competes are ubiquitous in their executive contracts.

Confidentiality agreements

Given the ban on non-competes, businesses in Alaska are advised to consider alternative measures to safeguard their interests. For example, confidentiality agreements can be used. These agreements prevent employees from disclosing or misusing confidential company information.

Non-solicitation agreements

Non-solicitation agreements are yet another option. These agreements are contractual agreements that employees agree not to solicit their former customers, clients or employees after they seek employment elsewhere.

Invention assignment agreements

Furthermore, companies can use invention assignment agreements. These ensure that any inventions or intellectual property developed by employees during their tenure belong to the employer.

The prohibition of non-competes marks a significant shift in Alaska’s employment law landscape. While it may pose challenges for businesses accustomed to using non-competes, it also presents opportunities for increased competition and innovation. Staying informed and adaptable will be crucial for employers navigating this evolving legal terrain.

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