With unemployment levels reaching a new high during the global pandemic, courts across the country have become increasingly reluctant to enforce non-compete agreements in employment contracts. As an example, a recent district court case, Robert Garcia v. USA Industries, Inc., demonstrates what may be a shift in Texas’ formerly lenient approach to non-competes. There, the court granted the plaintiff’s request for a temporary restraining order against the non-compete clause in his severance agreement, finding not only that there was inadequate consideration to enforce the non-compete provision, but that the provision itself was unreasonable. While this is only one case, in light of this shift in the interpretation of non-compete agreements as reflected in this decision, companies should ensure that their non-competes are reasonable as to scope and time, supported by adequate consideration, and narrowly tailored to protect the company’s legitimate business interests so as to increase the chances of the agreement being upheld. This will only become more important as more and more states pass restrictive covenants legislation limiting what is permissible.
Continue Reading Texas Decision Highlights Concerns Regarding Limiting Enforceability of Non-Compete Agreements During COVID-19 Pandemic
Kate Perrelli and Dawn Mertineit to Present at the Boston Bar Association’s Virtual Trade Secrets & Restrictive Covenants Conference
This coming Wednesday, June 9, 2021, Seyfarth partners Kate Perrelli and Dawn Mertineit will participate in panel discussions at the Boston Bar Association’s 2021 Virtual Trade Secrets & Restrictive Covenants Conference. At 9:00 AM Eastern, Dawn will be a panelist in the session regarding “The Implications of the Massachusetts Noncompetition Agreement Act and Other State
Erik Weibust to Present “The Ethics of Noncompetes” for Thomson Reuters
On June 2, 2021, from 2:00 p.m. to 3:00 p.m. EST, Seyfarth partner Erik Weibust will take part in a panel discussion for Thomson Reuters’ West LegalEdCenter on the ethical issues concerning non-competes, including:
- What the lawyer exemption under Rule 5.6 of the Model Rules of Professional Conduct really means and how the confidentiality rules
Oregon Blazes a Trail of Non-Compete Amendments
For the fourth time in six years, Oregon is in the news again for an update to its non-compete laws.
Prior Oregon Law
Oregon last updated its non-compete laws just two years ago, with a statute that requires employers to provide terminated employees with a signed, written copy of their non-compete within 30 days of termination. That new obligation was in addition to other Oregon-specific requirements, including:
- Similar to Massachusetts’ 2018 law, the employer must inform the employee that a non-compete is a condition of employment in a written employment offer received at least two weeks before the employee’s first day, or the agreement must entered into upon a “bona fide” promotion;
- The employee must be engaged in administrative, executive, or professional work and must (a) perform predominantly intellectual, managerial or creative tasks, (b) exercise discretion and independent judgment, and (c) be salaried;
- The employee’s gross annual salary and commissions at the time of termination exceeds the median family income for a four-person family; and
- The duration of non-compete duration could not exceed 18 months.
Continue Reading Oregon Blazes a Trail of Non-Compete Amendments
The Silver State Grips the Blue Pencil
As we have previously blogged about, in 2016 the Nevada Supreme Court refused to adopt the “blue pencil” doctrine and held that Nevada courts could not modify over-broad restrictive covenants. The following year, we alerted readers that the Nevada legislature amended Nevada Revised Statute 613, governing non-competition agreements. Among other things, the amendment granted courts the authority to “blue-pencil” non-competition agreements, overturning the Nevada Supreme Court’s 2016 decision in Golden Road Motor Inn, Inc. v. Islam.
Continue Reading The Silver State Grips the Blue Pencil
Georgia Business Court Utilizes Georgia’s Restrictive Covenants Act to Modify the Applicable Time Period of a Customer Non-Solicit Provision
A decade ago, the Georgia legislature enacted a new restrictive covenant statute, O.C.G.A. § 13-8-51 et al. (the “Georgia RCA”). Among other things, the Georgia RCA permitted Georgia courts to blue-pencil or “modify a covenant that is otherwise void and unenforceable so long as the modification does not render the covenant more restrictive with regard to the employee than as originally drafted by the parties.” O.C.G.A. § 13-8-53(d).
Continue Reading Georgia Business Court Utilizes Georgia’s Restrictive Covenants Act to Modify the Applicable Time Period of a Customer Non-Solicit Provision
Now Available! Seyfarth’s 50 State Non-Compete Desktop Reference
50 State Desktop Reference
What Businesses Need to Know About Non-Competes and Trade Secrets Law, 2020-2021 Edition
Seyfarth’s Trade Secrets, Computer Fraud & Non-Competes practice group is pleased to provide the 2020-2021 edition of our 50 State Desktop Reference, which surveys the most-asked questions related to restrictive covenants and trade secrets in all 50 states,
District of Columbia’s Sweeping Ban on Non-Competes
In a move aligned with California’s view of non-competes, the District of Columbia (subject to congressional oversight) will soon impose a complete ban on any employment covenant that restricts employment elsewhere at any time, even restrictions forbidding simultaneous employment somewhere else. On January 11, 2021, Mayor Muriel Bowser signed the Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”), which will soon become law unless Congress issues a joint resolution disapproving the Act within 30 days of receipt of the Act. The projected date for the Act to become law is March 19, 2021. Then, in all likelihood, the Act will go into effect in the fall of 2021 once the DC Council tees up a fiscal impact statement and funding for the Act after the next budget cycle.
Continue Reading District of Columbia’s Sweeping Ban on Non-Competes
Upcoming Webinar! Trade Secrets & Non-Competes 2020 Year in Review
Webinar
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
In the first installment of the 2021 Trade Secrets Webinar Series, Seyfarth attorneys will review noteworthy legislation, cases, and other legal developments from across the nation over the
Ten Trade Secret Resolutions to Keep for 2021 and Beyond
2020 brought with it a bevy of new challenges for companies of all sizes in every industry, not the least of which was protecting trade secrets and confidential information in the face of newly remote workforces. 2021 brings with it new hope and the promise of a return to “normalcy”—whatever that may mean in this changed world. But companies must remain vigilant about protecting their trade secrets and confidential information. As we enter the new year, here are ten resolutions that companies should make—and keep—to accomplish that important goal in 2021 and beyond.
Continue Reading Ten Trade Secret Resolutions to Keep for 2021 and Beyond