Non-Compete Enforceability

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!

In the third installment of our 2022 Trade Secrets Webinar Series, Seyfarth attorneys Justin Beyer and Ian Long discussed employee mobility and its impact on trade secrets and non-compete agreements, and shared practical steps that companies can take to protect intellectual capital in today’s market.

As a follow up to this webinar, our team wanted to highlight:

• Protecting
Continue Reading Webinar Recap! Employee Mobility and Its Effects on Trade Secrets and Non-Competes

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

A federal court in Texas recently provided useful insights on what constitutes “solicitation” by a former employee under that employee’s restrictive covenant with his former employer, and the court provided further insights on what inferences courts will, and will not, draw in favor of a plaintiff seeking a preliminary injunction based on alleged misappropriation of trade secrets.[1]

The defendant worked for the plaintiff, Sunbelt, for over twenty years, primarily as a salesperson covering institutional customers.[2] As part of his employment, the defendant signed an employment agreement that, among other things, prohibited him from “solicit[ing]” Sunbelt’s customers or competing with Sunbelt within a certain geographic area.[3] He later left to join one of Sunbelt’s competitors. Sunbelt filed suit and sought a preliminary injunction, asserting that the employed had, among other things, solicited Sunbelt’s former customers, worked for Sunbelt’s competitor within the area prohibited by the non-competition agreement, and misappropriated Sunbelt’s trade secrets.[4]
Continue Reading Federal Court Provides Insight on Meaning of “Solicitation” and Plaintiff’s Burden on Motion for Preliminary Injunction

Wednesday, April 20, 2022
12:00 p.m. to 1:00 p.m. Eastern
11:00 a.m. to 12:00 p.m. Central
10:00 a.m. to 11:00 a.m. Mountain
9:00 a.m. to 10:00 a.m. Pacific

REGISTER HERE

In the third installment of our 2022 Trade Secrets Webinar Series, Seyfarth attorneys will discuss employee mobility and its impact on trade secrets and non-competes. Learn best practices and practical
Continue Reading Upcoming Webinar! Employee Mobility & Its Effects on Trade Secrets and Non-Competes

Louisiana is not a fan of non-competes. Any employer who has employees in Louisiana is likely aware of that (or should be). Louisiana statutory code says so; case law says so; and now the Fifth Circuit has chimed in to add a little more food for thought on the subject.

In its recent unpublished decision of Rouses Enterprises, L.L.C. v. Clapp, 2022 WL 686332 (5th Cir. Mar. 8, 2022), the Fifth Circuit upheld the Eastern District of Louisiana’s decision that a non-compete was unenforceable against Rouses’ former Vice President of Center Store Merchandising, James B. Clapp II, because, when Clapp signed the non-compete agreement, he was not a Rouses employee, but merely an applicant who was later offered and accepted a job.
Continue Reading Employer Beware: When Louisiana Says “Employee”, It Means Employee

trade secrets uniquenessAs is often true in fashion, what once was old is now new again. But for famed wedding dress designer, Hayley Paige Gutman, she certainly is ruing the Second Circuit’s recent decision to revive its 1999 holding of Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999). In JLM Couture, Inc. v. Gutman, 24 F.4th 785 (2d Cir. 2022), the Second Circuit held that JLM Couture’s non-compete was enforceable through New York’s oft-overlooked “uniqueness” exception. But the real question to me as a litigator is whether this doctrine should become part of the tool bag going forward. Upon analysis, the answer is somewhat mixed and going to be exceedingly fact dependent.
Continue Reading Is “Uniqueness” Getting a Revival?

In the second program in the 2022 Trade Secrets Webinar Series, Seyfarth partners Jesse Coleman, Dan Hart, and Caitlin Lane discussed how to identify the greatest threats to trade secrets, provided tips and best practices for protecting trade secrets abroad, and covered enforcement mechanisms and remedies internationally and in the US.

As a follow up to this webinar, our
Continue Reading Webinar Recap! Protecting Trade Secrets and Enforcing Restrictive Covenants Internationally

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