This has proved a boon to Trace International, an Annapolis (Md.) outfit devoted to helping companies cope with the complexities of the FCPA. Trace was founded in 2001 by Alexandra Wrage, a lawyer who used to travel the globe to conduct FCPA due diligence for Northrop Grumman (NOC
). She concluded that one organization could do the same job for a multitude of companies.
Trace now has more than 100 multinationals as members, including ExxonMobil (XOM
) and Dow Chemical (DOW
). They pay annual dues of $15,000 to $35,000 to get employee training and reports on prospective foreign partners. Wrage has also benefited: Her salary as president of Trace, run as a nonprofit, is $330,000, up from $121,000 in 2004. Noncompete agreements used to be limited to employees with valuable customer lists, such as stockbrokers and insurance salespeople. But now "they're all over creation," says Neil Mullin, a Montclair (N.J.) lawyer who represents workers. "They've become a way of life."
The reason: More than ever before, information is what gives businesses their competitive edge, and they want to make sure that inside dope on products and services doesn't walk out the door. In recent years, efforts have been made to prevent such people as tax preparers, ad executives, car salesmen, event planners, hairdressers, flower arrangers, exterminators, and even housecleaners from jumping to rival companies. "We're seeing [noncompetes] spread further and further out into so many industries now that you would just never have thought of," says Christopher P. Stief, a Radnor (Pa.) attorney. His firm, Fisher & Phillips, has 10 lawyers in its newly named Employee Defection & Trade Secrets Practice Group.
California, home to businesses chock-full of proprietary information, doesn't allow noncompetes. And in a number of states, courts frown on the agreements and often won't enforce them or will substantially limit their provisions. But employment lawyers say some companies have recently begun to find a way around this by having the noncompete document say that it will be governed by the law of a state that tends to uphold such restrictions. One maddening aspect about being investigated by the Securities & Exchange Commission has been that if the agency decided not to file charges, there was no easy way to find out that the probe had ended. That has changed in recent months.
SEC staffers now send letters to anyone who might have been given cause for concern, once a decision has been made not to pursue regulatory action. "It's really not fair to leave people who are being sort of punished in a sense by having that hanging over their head," says Walter Ricciardi, deputy director of enforcement, who set the new policy. "If there has been a conclusion that it's over, it's only fair to let people know that they can rest easier at night."