Colorado Poised to Dramatically Limit the Enforceability of Non-Competes and Other Restrictive Covenants for Low-Wage Workers

Earlier this week, the Colorado state legislature voted to pass HB22-1317, which if signed into law by Democratic Governor Jared Polis, would place Colorado among several other states with the strictest bans on restrictive covenant agreements for low-wage workers. A spokesperson for Governor Polis has already indicated that the governor plans to sign the bill. If executed, the bill would become effective 90 days after the legislature adjourns (early August 2022), so immediate and very substantial changes appear to be right around the Rocky Mountain road.
Continue Reading Danger: Rocky Road Ahead!

Nowadays, it seems like non-compete legislation is being passed at a breakneck speed. We saw numerous new laws on the books in the last year, and dozens more are being considered in various states. Many citizens are in favor of tamping down on non-competes, and a fair number of practitioners (including many on the Seyfarth team!) agree that certain rules regarding restrictive covenants are reasonable and appropriate, including limitations on non-competes for low-wage workers and rules requiring some advance notice to incoming employees being asked to sign restrictive covenants. But some in the business community seem to be saying: not so fast.

Most recently, the New Hampshire legislature is debating a new bill introduced in January that, as originally drafted, would have invalidated non-competes if an employer required vaccination as a condition of employment and an employee refused to comply with the vaccine mandate. Introduced by a number of Republican representatives, this proposed law was an unsurprising reaction to the Biden administration’s vaccination push. While some in the business community weren’t happy with that proposed new law, they were willing to accept itbut are extremely unhappy with an amended and substantially broadened version of the bill that passed the House of Representatives just a few weeks ago. The amended bill would invalidate non-competes if an employer “makes any material change in the terms of employment,” perhaps a surprising move for Republican legislators, who are often pro-enforcement of restrictive covenants. This appears to be a clear nod to Massachusetts’ common law “material change” jurisprudence, a one-of-its-kind doctrine (at least for now) that requires employers to issue new agreements upon a material change in an individual’s employment—whether that be a promotion, demotion, change in compensation, change in responsibilities, or any other material change in the employee’s working conditions.
Continue Reading New Hampshire Looks to Jump on the “Material Change” Bandwagon—and Employers Are Pushing Back

On Wednesday, June 29, Robert Milligan—Seyfarth partner and co-chair of the firm’s Trade Secrets, Computer Fraud & Non-Competes group—is presenting the “Noncompetes Under New State Law Restrictions” webinar for Strafford.

The panel will discuss the latest state legislative changes and case law trends regarding non-compete agreements and other restrictive covenants in New York, California, Illinois, Washington, and other states and
Continue Reading Robert Milligan to Present Webinar on Non-Compete State Legislation for Strafford

minnesota non-compete legislationOn February 22, 2022, the Minnesota legislature came one step closer to banning non-compete clauses under certain circumstances. On that date, the Minnesota House Labor, Industry, Veterans and Military Affairs Finance and Policy Committee passed HF999.

HF999 renders non-compete clauses in Minnesota void and unenforceable unless either of two circumstances are present: (1) upon termination, the employee earned an annual salary that is more than the median family income for a family of four in Minnesota (as determined by the most recent US Census Bureau data), or (2) the employer agrees to pay, on a pro-rata basis, fifty percent of the employee’s highest annual salary over the past two years for the duration that the employee is subject to the non-compete clause.
Continue Reading Minnesota Advances Partial Ban on Non-Compete Clauses

restricive-covenenat-legislation-trendsOver the past 10–15 years, we have seen an explosion of legislative activity related to restrictive covenants. This activity is happening not only in state legislatures but on the federal level as well. While each proposal is different, we’ve certainly seen trends emerge, including required notice provisions, fee shifting, and choice of law and venue requirements.

One of the most prevalent trends is the move towards banning non-competes (and sometimes, other restrictive covenants) for so-called “low-wage workers.” To date, 10 states have implemented a low-wage ban of sorts: Illinois, Maryland, Maine, Massachusetts, Oregon, Nevada, New Hampshire, Rhode Island, Virginia, and Washington.[1]
Continue Reading More States Eye Low-Wage Non-Compete Bans

In the first program in the 2022 Trade Secrets Webinar Series, Seyfarth attorneys Michael Wexler, Robert Milligan, and James Yu reviewed 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, they provided predictions for what to
Continue Reading Webinar Recap! 2021 Trade Secrets & Non-Competes Year in Review

Yet another state has made it harder for businesses to implement restrictive covenants—this time with criminal penalties.

Colorado’s restrictive covenants statute already provides that it is unlawful to “use force, threats, or other means of intimidation to prevent any person from engaging in any lawful occupation,” and further states that non-competes are invalid unless they fall into one of four categories:

  1. Covenants made in connection with the purchase and sale of a business (or the assets of a business);
  2. Covenants made for the protection of trade secrets;
  3. Covenants for the recovery of expenses incurred in educating and training employees who were employed for less than 2 years; and
  4. Covenants for executive and management personnel (and their professional staff) and officers.

That has been the law in Colorado for years—but a new, draconian portion of the statute will go into effect in just over a month.
Continue Reading Colorado Criminalizes Attempts to Curb Competition

What You Need to Know about the Recent Cases and Developments in Trade Secrets, Restrictive Covenants, and Computer Fraud

Thursday, January 27, 2022
2:00 p.m. to 3:00 p.m. Eastern
1:00 p.m. to 2:00 p.m. Central
12:00 p.m. to 1:00 p.m. Mountain
11:00 a.m. to 12:00 p.m. Pacific

REGISTER HERE

In the first installment of the 2022 Trade Secrets Webinar Series,
Continue Reading Upcoming Webinar! 2021 Trade Secrets & Non-Competes Year in Review

Throughout 2021, our dedicated Trade Secrets, Computer Fraud & Non-Competes Practice Group hosted a series of CLE webinars that addressed significant trade secret and restrictive covenant issues facing clients today. This year’s series included:

  1. 2020 Year in Review: What You Need to Know about the Recent Cases and Developments in Trade Secrets, Non-Competes, and Computer Fraud Law
  2. Employee Termination & Data Repatriation in the Remote Work Environment
  3. The Connection Between Wage and Hour & Restrictive Covenant Law
  4. How and Why Texas is Different When it Comes to Trade Secrets and Restrictive Covenants
  5. Anatomy of an M&A Transaction: How to Issue Spot for Non-Compete, Trade Secrets/Confidential Information, and Intellectual Capital Concerns
  6. Overview of Non-Compete Legislation and Enforcement Issues from 2021

As a conclusion to our 2021 webinar series, we compiled a list of key takeaway points for each program. For those clients who missed any of the programs in this year’s series, recordings of all of our past webinars are available on the blog, or you may click on the link for each webinar below to view the online recording.
Continue Reading 2021 Trade Secrets Webinar Series: Takeaways & Recordings

On August 13, 2021, Governor Pritzker signed into law Public Act 102-0358, which amends the Illinois Freedom to Work Act and sets forth specific requirements for the enforceability of restrictive covenant agreements in Illinois for agreements entered into on or after January 1, 2022.

Income Thresholds
To be enforceable, as of the law’s effective date, non-compete agreements may only be
Continue Reading What Employers Need to Know Regarding Illinois’ New Restrictive Covenant Law