The Hiring Risk Everyone Thinks Went Away
Non-competes are still around and even where they aren't, it doesn’t mean what you think it does
Over the past couple of years, there’s been a steady drumbeat about non-compete agreements going away. The FTC attempted a near-total federal ban. State legislatures have been chipping away at enforcement. The headlines were consistent enough that a reasonable business owner could conclude: non-competes are basically over, and the risk of hiring from a competitor has dropped accordingly.
Most businesses took that as a green light. Hire the person you’ve been watching. Move faster. Don’t worry too much about what someone signed at their last job.
Here’s the problem: the risk didn’t disappear. It changed shape.
What’s Still There
The non-compete headline misses what actually creates liability in these situations. First, in many states, including Indiana, non-competes are very much enforceable. Also, even where non-competes are not enforceable, trade secret law hasn’t changed,. Non-solicitation agreements haven’t changed. Confidentiality obligations haven’t changed. The basic legal reality is that an employee who takes protected information from their former employer and deploys it at your company creates liability — for them, and potentially for you — regardless of whether a non-compete clause exists at all.
Courts that won’t enforce a broad non-compete will still take trade secret misappropriation seriously. The Defend Trade Secrets Act gives federal courts jurisdiction over these claims. Non-solicitation agreements covering clients and employees are routinely enforced even in states that refuse to touch non-competes. And a well-drafted employment agreement at a sophisticated company has multiple layers — the non-compete is only one of them.
The risk hasn’t been legislated out of existence. It’s been redistributed into legal theories that may actually be easier to pursue. Meanwile, if you’re in Florida, the landscape just got materially worse: the CHOICE Act, effective July 2025, extended enforceable non-compete periods to four years and now allows courts to enjoin the new employer directly — meaning you can be named in a lawsuit over a hire you made in good faith, before any merits are decided.
The Three Questions You’re Not Asking
Every competitive hire carries three questions most businesses don’t ask until it’s too late.
First: what did this person agree to? Not just whether they signed a non-compete — but what else is in the package. Non-solicitation of clients? Non-solicitation of employees? Confidentiality obligations that outlast the non-compete period? If the non-compete is unenforceable, the rest of the agreement may not be.
Second: what did they have access to? Customer lists, pricing strategies, product roadmaps, vendor relationships, proprietary processes — all potentially protectable as trade secrets or confidential information. The relevant question isn’t what they took with them. It’s what they know, and whether using that knowledge in their new role constitutes misappropriation of something their former employer has a legitimate interest in protecting.
Third: what are you asking them to do? Hiring a competitor’s sales director is different from immediately deploying them to call on accounts they managed at the prior employer. The former is talent acquisition. The latter starts to look like using someone as a vehicle to reach protected client relationships — which is exactly what non-solicitation and trade secret claims are designed to address. The overlap between what they knew and what you’re asking them to do is where the exposure lives.
How It Usually Starts
It doesn’t start with a lawsuit. It starts with a letter.
“We understand you recently hired [name]. We want to bring to your attention that [name] is subject to certain ongoing obligations to [former employer] and that we believe their role at your organization may implicate those obligations.”
Now you’re in it. Lawyers get involved. The new employee gets anxious. The business relationship you were building has friction before it’s ever produced results. Even if you ultimately prevail, you’ve absorbed real costs — legal fees, distraction, and a chilling effect on the hire’s productivity in the months it takes to resolve.
None of that requires bad intent. You can make the hire in good faith, believe the agreements won’t hold up, and still spend six figures finding out whether you’re right.
What You Can Do
The due diligence here doesn’t require a full legal review before every competitive hire. It requires a pause — a structured moment before the offer goes out to ask the three questions above and actually look at the answers.
Ask the candidate whether they have restrictive covenant agreements and get copies. Have someone assess whether the role creates meaningful overlap with what they agreed to and what they knew. Document clearly — in writing — that you are not asking the new hire to bring confidential information from their prior employer, that you don’t want it, and that their value is their skills and experience, not the contents of someone else’s systems. That documentation is evidence of good faith if a dispute arises.
Define the role carefully in the first six to twelve months. There may be ways to structure the onboarding that get you what you’re looking for without creating unnecessary friction.
The broader lesson is the same one running through this series: when the rules change, risk doesn’t disappear — it moves. Your job isn’t to chase headlines. It’s to understand where it moved, and make sure you’re not standing there when it lands.
Mike Lang is a transactional lawyer who writes weekly for founders and family business owners navigating the deals that define their companies. Questions or topics you want covered? Reply to this email.