The Supreme Court in the UK, the highest court in the country, last week ruled on a restrictive covenant case for the first time in 100 years [Tillman v Egon Zehnder Ltd [2019] UKSC 32 (3 July 2019)].  It has clarified important points on interpretation, the key takeaway being it will now be easier for employers to enforce covenants against departing employees.

Covenants Must Be Necessary to Protect Employer’s Interests

It has long been established in the UK, that restrictive covenants are an unlawful restraint of trade unless they go no further than is necessary to protect the employer’s legitimate proprietary interests. The Supreme Court recognized as such in quoting the colorful language of a court decision from the 15th century criticizing a plaintiff employer looking to enforce a covenant:    Continue Reading First UK Supreme Court Decision on Restrictive Covenants for 100 years

On July 11, 2019, Governor Sununu signed S.B. 197 into law. S.B. 197 prohibits an employer from requiring an employee who makes 200% of the federal minimum wage ($14.50) to sign a non-compete agreement restricting the employee from working for another employer for a specified period of time or within a specific geographic area. Any “noncompete agreement entered into between an employer and a low-wage employee shall be void and unenforceable.” The new law will take effect in September. S.B. 197 had bipartisan sponsorship.

New Hampshire joins states like Massachusetts, Maryland, Illinois, and Washington, all of which have passed legislation limiting restraints placed on lower wage employees. For example, in Washington, non-competes are only enforceable for employees earning over $100,000 per year. Unlike in New Hampshire, Washington’s bill specifically notes that it does not “prohibit an agreement that prohibits the disclosure of trade secrets . . . .” In 2015, a similar piece of federal legislation failed to garner the necessary support.

We will continue to closely monitor proposed non-compete legislation across the nation and report back with any updates.

In May, Seyfarth attorneys Katherine Perrelli, Robert Milligan, and Dawn Mertineit participated in the ITechLaw 2019 World Technology Conference in Boston.

Seyfarth Partner Katherine Perrelli moderated the “Tech Transformation of Legal Services Delivery: Opportunities, Barriers, and Potential Solutions” session. The seesion focused on the current state of legal tech tools, as well as the opportunities and challenges presented by the use of tech tools in delivering legal services.

As a conclusion to the conference, we compiled a summary of takeaways:

  • Tech transformation is impacting both the business of law and the practice of law. Robotic process automation (RPA), machine learning and natural language processing, knowledge management, legal project management, data analytics, and technology-enabled delivery channels appear to be the areas of focus.
  • Clients are increasingly demanding to know what legal tech their outside counsel is using—no longer sufficient to do legal work the “old” way if you want to retain clients
  • Increased efficiency through the use of technology is good for clients, and despite the perception to the contrary, should positively impact firms’ bottom lines. Attorneys should work at the “top of their license” and deliver real value to clients. While not all legal work can or should be replaced by technology solutions, many tasks that lawyers perform can be either replaced or positively impacted through use of technology. (see e.g., contract management solutions, computer assisted document review with predictive coding and other analytical software automated learning) and allow them to work on other projects more suitable for their experience.

On June 24, 2019, the Supreme Court issued its decision in Food Marketing Institute v. Argus Leader Media and resolved fractured circuit splits about the parameters for when the government may withhold information from a Freedom of Information Act (“FOIA”) request based on responsive information being confidential or a trade secret. Earlier this year, we reported on this case when the Supreme Court granted certiorari and predicted that the case would have significant ramifications for the protections given to sensitive information submitted by companies to the government. Continue Reading Supreme Court Issues Decision Significantly Expanding the Scope of FOIA’s Confidentiality Exemption

On May 14, 2019, Oregon Governor Kate Brown signed into law HB 2992, which, as of January 1, 2020, requires an employer to provide a terminated employee with a signed, written copy of his or her non-competition agreement within 30 days of his or her termination date.  Failure to do so will render the agreement voidable and unenforceable in the state of Oregon.

Backdrop for HB 2992

Under current Oregon law (ORS 653.295), a non-competition agreement is not enforceable unless the following four requirements are met: (1) the employer informs the employee of the non-competition agreement in a written employment offer received at least two weeks before the employee’s first day, or the agreement is entered into upon promotion; (2) the employee is engaged in administrative, executive, or professional level work; (3) the employer has a protectable interest in requiring the non-competition agreement; and (4) the employee’s gross annual salary and commissions at the time of termination exceeds the median family income for a four-person family.  Furthermore, the term of a non-competition agreement may not exceed 18 months from the date of the employee’s termination.  Any time remaining on a non-competition agreement beyond 18 months is voidable and precluded from enforcement by any Oregon court. Continue Reading Oregon Adds Employee-Friendly Requirement to Existing Non-Compete Law… But Also Produces Company-Friendly Trade Secrets Law in Recent Court of Appeals Case

In just a few short months, on January 1, 2020, the California Consumer Privacy Act (CCPA) is set to go into effect, establishing new consumer privacy rights for California residents and imposing significant new duties and obligations on commercial businesses conducting business in the state of California. Consumer rights include the right to know what personal information a business is collecting, selling, and disclosing about them; the right to deletion; the right to opt-out of the sale of personal information; and the right not to be discriminated against (written as a business duty). These rights are intended to provide consumers with a level of control of their personal information and to establish transparency on the part of the businesses to comply with consumers’ exercise of their privacy rights. In addition, businesses are required to provide employee training; website notice of consumer rights and categories of personal information collected, sold, and disclosed; and to implement and maintain adequate security measures. The penalties of non-compliance can be severe, with avenues for both regulatory enforcement and private cause of action. Learn what the attorney general’s forthcoming regulations likely have in store for businesses and what your organization should be doing now to proactively prepare for the CCPA to ensure compliance.

Jason Priebe, John Tomaszewski, and Edward “Ted” Murphree, three of our experienced eDiscovery and Information Governance (eDIG) and Global Privacy and Security (GPS) practitioners, will present a series of three 1-hour CLE webinars. The presenters will provide high-level discussion on strategies for CCPA compliance.

CCPA Webinar Series Part 1: An Overview and What You Need to Know (Until It Changes)

Tuesday, July 9, 2019
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

CCPA Webinar Series Part 2: Business Obligations and Responsibilities (So Far As We Know Them–They Will Change)

Wednesday, July 17, 2019
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

CCPA Webinar Series Part 3: Enforcement and Compliance (Or What We Think Will Happen)

Thursday, August 1, 2019
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

While it is well-settled law that an attorney cannot be bound by an agreement restricting the right to practice law, that does not insulate attorneys from all restrictive covenants. As we have previously discussed, there are exceptions to this rule, as a Massachusetts attorney recently learned the hard way.  Continue Reading “A Very Tortured Argument”—Lawyer Cannot Use Bar Membership to Skirt a Bargained-For Restrictive Covenant in the Sale of a Non-Legal Business

Even before the California Supreme Court decided Edwards in 2008, employers knew all too well the woes of attempting to enforce non-competes against California employees.  Edwards simply reaffirmed California’s long-standing policy in favor of employee mobility, finding that employee non-competition agreements are typically void in California unless they fall within one of the exceptions to Business and Professions Code section 16600.  But this need not become the fate of every non-compete; notwithstanding Edwards and recent California decisions applying the state’s notorious statute, section 16600, it may be possible for employers to enforce non-competition forfeiture provisions by including them in deferred compensation top hat plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). Continue Reading Not All Is Lost for California Employers: Enforce Non-Compete Forfeiture Provisions through ERISA Top Hat Plans?

As we’ve previously written about on this blog, last summer the Massachusetts legislature passed a non-compete reform bill which went into effect on October 1, 2018. Readers of this blog will recall our concerns that the new law is in many ways confusing and may lead to unpredictable results. Now, more than six months after its effective date, we have a second published decision out of the United States District Court for the District of Massachusetts citing the new Massachusetts Noncompetition Agreement Act (“MNCA”), Mass. Gen. Laws ch. 149, § 24L. Like the first published decision, this decision does not directly analyze an agreement that is subject to the Act, but it is still instructive for employers with personnel who may be subject to the MNCA.  Continue Reading Federal Judge Confirms That Massachusetts’ New Non-Compete Law Does Not Require Garden Leave or Massachusetts Choice of Law

The 2019 edition of The Legal 500 United States recommends Seyfarth Shaw’s Trade Secrets group as one of the best in the country. Nationally, for the fourth consecutive year, our Trade Secrets practice earned Top Tier.

Based on feedback from corporate counsel, Seyfarth partner Michael Wexler was ranked in the editorial’s “Leading Lawyers,” and Robert Milligan, Daniel Hart, Erik Weibust, and J. Scott Humphrey were also recommended in the editorial.

The Legal 500 United States is an independent guide providing comprehensive coverage on legal services and is widely referenced for its definitive judgment of law firm capabilities. The Legal 500 United States recognizes and rewards the best in-house and private practice teams and individuals over the past 12 months. The awards are given to the elite legal practitioners, based on comprehensive research into the U.S. legal market.