In Michigan, antitrust law generally prohibits agreements or practices that restrain trade or competition. However, Michigan law also recognizes a limited exemption for restrictive covenants in employment agreements, such as non-competition agreements and non-solicitation agreements.

Under Michigan law, restrictive covenants are generally enforceable if they are reasonable in scope, duration, and geographic area, and if they are necessary to protect a legitimate business interest of the employer. Such interests may include protecting trade secrets, confidential information, customer relationships, or the investment of time and resources in training employees.

The Michigan antitrust exemption for restrictive covenants in employment agreements is rooted in the Michigan Antitrust Reform Act (MARA), which was enacted in 1980 to modernize and clarify Michigan antitrust law. MARA includes a provision that exempts certain types of agreements from the general prohibition on restraints of trade, including agreements between an employer and employee relating to the employment relationship.

However, on January 5, 2023, the Federal Trade Commission (FTC) issued an extension of an earlier policy statement announcing its intention to prohibit the use of non-compete clauses in employment contracts, citing concerns about their potential negative impact on employee mobility and competition in the labor market. The FTC’s statement does not have the force of law, but it is a strong signal that the agency will be taking a more aggressive stance on non-competes going forward.

The FTC’s proposed ban on non-compete clauses in employment agreements could potentially affect Michigan’s antitrust exemption for restrictive covenants. If the FTC’s ban were to be implemented, it could invalidate non-compete clauses in Michigan employment contracts that would otherwise be considered reasonable and enforceable under Michigan law.

However, it is important to note that the FTC’s policy statement only applies to non-compete clauses, and not to other types of restrictive covenants such as non-solicitation agreements. Moreover, the FTC’s ban is not yet in effect, and it remains to be seen how it will be implemented and enforced.

In conclusion, Michigan antitrust law recognizes a limited exemption for restrictive covenants in employment agreements, such as non-competition and non-solicitation agreements, as long as they are reasonable in scope and necessary to protect legitimate business interests. However, the proposed FTC ban on non-compete clauses in employment agreements could potentially affect the enforceability of such agreements in Michigan and elsewhere. Employers should stay informed about these developments and consult with legal counsel to ensure that their employment agreements are in compliance with the law.