In Seyfarth’s first installment in its 2020 Trade Secrets Webinar Series, Seyfarth attorneys Robert Milligan, Jesse Coleman, and Joshua Salinas reviewed the noteworthy legislation, cases, and other legal developments from across the nation over the last year in the area of trade secrets and data theft, non-competes and other restrictive covenants, and computer fraud—plus, predictions
Continuing our annual tradition, we have compiled our top developments and headlines for 2019 & 2020 in trade secret, non-compete, and computer fraud law. Here’s what you need to know to keep abreast of the ever-changing law in this area.
1. Another Year, Another Attempt in Congress to Ban Non-Competes Nationwide
Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.) introduced legislation in 2019 entitled the Workforce Mobility Act (“WMA”). The WMA seeks to ban non-compete agreements outside of the sale of a business or dissolution of a partnership.
Not only would the WMA abolish covenants not to compete nationwide, outside of the extremely narrow exceptions highlighted above, but it would also provide the Department of Labor (DOL) and Federal Trade Commission (FTC) with broad enforcement power. If enacted, the legislation would empower the FTC and DOL to enforce the ban through fines on employers who either fail to notify employees that non-compete agreements are illegal or who require employees to sign covenants not to compete. Additionally, the WMA establishes a private right of action for all employees allegedly aggrieved by a violation of the WMA.
The WMA contains a carve out for parties to enter into an agreement to protect trade secrets. As currently drafted, the WMA does not abrogate the scope of protections provided by the Defend Trade Secrets Act.
Presently, there are no generally applicable federal restrictions on non-compete agreements, and enacting such a law would have to pass Constitutional muster. We expect to see continued activity at the federal legislative level to attempt to ban or limit the use of non-competes.
2. New State Legislation Regarding Restrictive Covenants
On Tuesday, January 28 at 12:00 p.m. Central, in the first installment of the 2020 Trade Secrets Webinar Series, Seyfarth attorneys will review noteworthy legislation, cases and other legal developments from across the nation over the last year in the area of trade secrets and data theft, non-competes and other restrictive covenants, and computer fraud.…
Following in the footsteps of its neighbors Maine, Massachusetts, and New Hampshire, Rhode Island recently enacted legislation that restricts the use of non-competition agreements with certain types of employees. The Rhode Island Noncompetition Agreement Act, which becomes effective on January 15, 2020, prohibits non-competes without regard to geographic location and duration for the following types of employees:
- Non-exempt employees under the FLSA;
- Undergraduate or graduate students participating in an internship or short-term employment;
- Employees aged 18 or younger; and
- Low-wage workers (defined as earning 250% or less of the federal poverty level ($31,225 per year under current data).
This is the third blog by our Trade Secrets , Computer Fraud & Non-Competes team dealing with Washington state’s House Bill 1450, which dramatically alters non-compete agreements within the state. This blog discusses retroactive application of the statute and potential challenges the statute may face as it rolls out in January 2020.
What’s The Law?
As our team previously detailed, Washington state’s new House Bill 1450, which goes into effect January 1, 2020, will eliminate non-compete agreements for employees earning less than $100,000 a year and independent contractors earning less than $250,000 a year. The law requires advance notice of non-competes “no later than the time of acceptance of the offer of employment” and “independent consideration” for non-competes entered into after employment.
In addition, among other changes, the new law:…
Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.) have introduced legislation entitled the Workforce Mobility Act (“WMA”). The WMA, like its prior incarnation from last year, seeks to ban non-compete agreements outside of the sale of a business or dissolution of a partnership. The WMA also follows a similar, unsuccessful, attempt by the federal government to limit non-compete agreements on a national scale earlier this year.…
The Council of the District of Columbia is considering a new bill that would ban the use of non-compete restrictions for workers below certain income thresholds—and impose stiff penalties upon employers who include such restrictions in their agreements. Introduced on October 8, 2019, the Ban on Non-Compete Agreements Amendment Act of 2019 (“the Bill”) places D.C. in line to join a growing number of states where non-compete restrictions upon low-income—and, in some cases, relatively high-income—employees are unenforceable.
The Bill would ban the use of non-compete agreements for employees who work in D.C. and who earn up to three times the D.C. minimum wage: $87,654 annually under current law. The Bill would ban such restrictions not just in written agreements, but also in an employer’s “workplace policy” whether in writing (i.e., through an employee handbook) or as a matter of the employer’s practice. Not only would such restrictions be void as a matter of law, but any employer who had such restrictions in place, regardless of whether or not the employer enforced them, would be separately liable to each affected employee in an amount “not less than $500 and not greater than $1,000.” Employers who attempt to enforce non-compete restrictions that fall below the Bill’s income threshold would be liable to affected employees in an amount “not less than $1,500.” Finally, employers who retaliate against employees for either (1) alleged violations of non-compete restrictions that would be unenforceable under the Bill or (2) inquiring about or informing an employer that the employer’s non-compete restrictions may be unenforceable under the Bill, would be liable to each such employee in an amount “not less than $1,000 and not more than $2,000.” Beyond liability to affected employees, the Bill would also empower the Mayor of the District of Columbia to impose fines for violations of the Bill in an amount up to $500, except for retaliatory conduct for which the fine would be at least $1,000.…
Cross-posted from the Carpe Datum Law blog.
In our May blog post, we took issue with the broadcast statement that ‘consumer privacy law was sweeping the country and that other states were jumping on the California Consumer Privacy Law (CCPA) bandwagon to enact their own state law.’ The problem as we saw it, was that the truth behind these sensationalistic statements was a bit more nuanced than people were led to believe. Most states, we found, that introduced consumer privacy legislation simply did not follow through, either by outright killing the legislation (MS) or by taking a step back with a wait and see approach (see TX). Nevada, by contrast, did neither. Instead, its legislature enacted its own consumer privacy solution, through SB 220, or as we call it, ‘the limited privacy amendment.’ We’ve opted to discuss Nevada’s approach here primarily because of its more restrictive application online and because its October 1, 2019, operational date is a full three months before the CCPA becomes operational.
First, the limited privacy amendment is not the CCPA. Let’s make that perfectly clear. True, it was modeled on the opt-out section of the CCPA, but it isn’t a mirror copy as it amends existing law. There are three primary areas operators conducting business over the Internet need to be aware of, when evaluating compliance measures: …
Seyfarth Synopsis: On Friday, August 9, 2019, Governor J. B. Pritzker signed a wide-ranging bill that, among other things, encompasses the Workplace Transparency Act. The Act, which will impact nearly every employer in Illinois: significantly restricts inclusion of non-disclosure and non-disparagement provisions in employment agreements, separation agreements, and settlement agreements; limits an employer’s ability to “unilaterally” require certain terms (including mandatory arbitration) as a condition of employment; creates annual training and disclosure requirements to the Illinois Department of Human Rights, and establishes new civil penalties for non-compliance. The new law includes additional requirements specific to restaurants, bars, hotels, and casinos. Those requirements take effect immediately, whereas the broader employment law changes take effect January 1, 2020.…
Joining the wave of jurisdictions limiting the competitive restraints employers may place on low-wage employees is Maryland. Maryland’s Noncompete and Conflict of Interest Clauses Act (the “Act”)―which passed without Governor Larry Hogan’s signature on May 28, 2019―will take effect on October 1, 2019. Recognizing that certain non-compete and conflict-of-interest clauses violate Maryland’s public policy and are therefore null and void, the Act prohibits employers from mandating that certain employees not join another employer or become self-employed in a same or similar business area. The covered employees are those who earn equal to or less than $15 per hour or $31,200 annually. This prohibition applies even if the parties entered into the employment agreement outside of Maryland and is not restricted to only post-employment actions. That is, a qualified employee may work for a competitor even during the term of employment.…