Non-Compete Enforceability

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Democratic U.S. Senators Elizabeth Warren (D-MA), Chris Murphy (D-Conn.), and Ron Wyden (D-Ore.) introduced legislation on April 26, 2018, entitled the Workforce Mobility Act (“WMA”). Although the text of the WMA is not yet available, according to various press releases, it would prohibit the use of covenants not to compete nationwide. In Senator Warren’s press release announcing her co-sponsorship of the bill, Senator Warren stated that “[t]hese clauses reduce worker bargaining power, stifle competition and innovation, and hurt Americans striving for better opportunities. I’m glad to join Senator Murphy to put an end to these anti-worker, anti-market agreements.”  Continue Reading Democratic U.S. Senators Seek to Abolish Non-Compete Agreements

This post originally appeared on the Workplace Class Action blog. 

Seyfarth Synopsis: True to his word, the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice has announced the first of a number of anticipated no-poach enforcement actions. While this was a civil proceeding, the Department of Justice has said that in some cases it may treat the conduct as criminal. Many executives and HR professionals are unaware that the antitrust laws apply to the employment marketplace. Thus, if they have not done so already, employers should consider the implementation of compliance programs to make sure that appropriate employees are aware of these developments and risks. Continue Reading DOJ Announces First of a Number of Anticipated No-Poach Enforcement Actions – What Should Employers Do Now?

For the third year in a row, the Washington state legislature failed to pass non-compete legislation, declining to take action on two separate bills that would have severely restricted employers’ ability to enforce former employees’ non-competition agreements. Continue Reading Washington State’s Legislature Rains on Non-Compete Critics’ Parade Yet Again

Continuing our annual tradition, we present the top developments/headlines for 2017/2018 in trade secret, computer fraud, and non-compete law.

1. Notable Defend Trade Secrets Act Developments

Just two years after its enactment, the Defend Trade Secrets Act (“DTSA”) continues to be one of the most significant and closely followed developments in trade secret law. The statute provides for a federal civil cause of action for trade secret theft, protections for whistleblowers, and new remedies (e.g., ex parte seizure of property), that were not previously available under state trade secret laws. Continue Reading Top Developments/Headlines in Trade Secret, Computer Fraud, and Non-Compete Law in 2017/2018

This post originally appeared on the Workplace Class Action blog. 

Seyfarth Synopsis: On February 1, 2018, the U.S. District Court for the Middle District of North Carolina entered an order granting in part, and denying in part, the plaintiff’s motion for class certification in a no-hire antitrust case entitled Seaman v. Duke University, 1:15-CV-462, at 1-2 (M.D.N.C. Feb. 1, 2018) (A copy of the decision can be found here.) The case was brought against Duke University, Duke University Health System (collectively “Duke”), and various University of North Carolina entities and one of its executives (collectively “UNC”). The complaint alleged that the defendants had entered into an agreement not to hire each other’s medical faculty employees in violation of federal antitrust laws. With some notable exceptions it has been difficult for plaintiffs to achieve class certification in wage suppression cases such as Seaman. The ruling is a “must read” for employers, as the Court’s reasoning and conclusions make it difficult to predict whether this case will be helpful to the plaintiffs’ bar in other cases.

Background To The Case

Seaman, an Assistant Professor of Radiology at Duke, contended that she applied for a position at UNC in 2015. She alleged that she was denied consideration due to an agreement among the Duke and UNC defendants that they would not hire each another’s medical faculty employees unless the hire involved a promotion. Seaman alleged that this agreement not only suppressed the compensation of defendants’ medical faculty members, but also their other skilled medical employees. Thus, Seaman sought to certify a class consisting not only of defendants’ medical faculty members, but also their physicians, nurses, and skilled medical staff. Id. at 1-2. Continue Reading Court Certifies Class In Duke-UNC No-Hire Workplace Antitrust Lawsuit

In Seyfarth’s first webinar in its 2018 Trade Secrets Webinar Series, Seyfarth attorneys Michael Wexler, Robert Milligan, and Joshua Salinas presented 2017 National Year In Review: What You Need to Know About the Recent Cases/Developments in Trade Secrets, Non-Compete, and Computer Fraud Law. The panel reviewed noteworthy cases and other legal developments from across the nation over the last year in the areas of trade secrets and data theft, non-competes and other restrictive covenants, and computer fraud. Plus, they provided their predictions for what to watch for in 2018.

As a conclusion to this well-received webinar, we compiled a summary of takeaways:

  • While the Defend Trade Secrets Act provides for an ex parte seizure order, courts have been very unwilling to provide such relief except in extraordinary circumstances.
  • In light of recent state laws and appellate court decisions at both the federal and state level in 2017, choice of venue and choice of law provisions must be carefully considered and strategically implemented.
  • The ABA’s May 4, 2017, Ethics Opinion encourages lawyers to have an open exchange of communication with their clients about the securities measures their firms are taking to safeguard the clients’ confidential information.

The Massachusetts legislature is back at it again. Under new leadership, the Joint Committee on Labor & Workforce Development recently scheduled a hearing for October 31, 2017 on the non-compete reform bills proposed in January of this year. While we know little about the hearing, the bills to be discussed are presumably Senate Bill S.988 and companion House Bill H.2366. These identical bills were filed in January 2017 by the same legislators who began this process back in 2009, Senator William Brownsberger and Representative Lori Ehrlich.

As we previously reported, the proposed law brings many past proposals to the table with some new additions as well. We also reported in July and November of 2016 that the House and the Senate were unable to bridge their differences and agree on a compromise bill that year. For a detailed overview of the bills likely to be discussed in the upcoming hearing, please see our prior report.

We will continue to monitor these developments and report back with any updates. Perhaps 2017 is finally the year for non-compete and trade secret reform in Massachusetts after all. Readers of this blog know all too well, however, that this may just be another of the many attempts that the Massachusetts Legislature is unable to see through to its fruition.

50 State Desktop Reference: What Businesses Need to Know About Non-Compete and Trade Secret Law

It has been an extraordinary year regarding trade secret and non-compete issues. We saw more and more cases filed in federal court asserting claims under the Defend Trade Secrets Act (“DTSA”) and for alleged violations of non-competes. Some states passed legislation further narrowing the use of non-compete agreements, and some media outlets, academics, and regulators have continued their criticism of such agreements. We expect over the next year, the law to continue to develop regarding the DTSA’s application, definitions, scope, limitations, benefits and interpretation with regard to the immunity provisions. Our 50 State Desktop Reference is a useful guide to know how the law is currently applied in each state.

Seyfarth’s Trade Secrets, Computer Fraud and Non-Competes Practice Group is pleased to provide the 2017-2018 Edition of our one-stop 50 State Desktop Reference, which surveys the most-asked questions related to the use of covenants and intellectual capital protection in all 50 states. For the company executive, in-house counsel, or HR professional, we hope this guide will provide a starting point to answer your questions about protecting your company’s most valuable and confidential assets.

How To Get Your Desktop Reference

To download the pdf of 2017-2018 Edition of the 50 State Desktop Reference, click here.

To request a hard copy of the Desktop Reference, click on the button below.

Robert B. Milligan, Seyfarth Partner and Co-Chair of the Trade Secrets, Computer Fraud & Non-Competes Practice Group, will be a speaker for the “Effective Use of Non-Compete Agreements by International Employers” webinar presented by Practicing Law Institute (“PLI”) on August 10, 2017 at 1:00 p.m. Eastern.

Multi-national employers often find that the appropriate use of non-compete agreements provides a business advantage in the marketplace. Companies often struggle however in implementing a consistent strategy and approach, particularly with the challenges presented by a mobile workforce and continual changes in applicable law. Please join us for an informative presentation by two leading employment lawyers who specialize in formulating non-compete strategies for multi-national employers.

Robert B. Milligan of Seyfarth Shaw LLP and Yvonne Gallagher of Harbottle & Lewis LLP will cover the following topics:

  • Creating and maintaining a comprehensive non-compete strategy
  • Solutions for addressing the continual changes in applicable law through choice of law, forum, and arbitration provisions
  • Discussion of applicable law in key forums and recent developments in United States and Europe
  • Integrating non-compete strategy with trade secret and confidential information protections

For more information or to register for the event, click here.

On June 3, 2017, Governor Sandoval signed Assembly Bill 276 into law, amending Nevada Revised Statute 613, which governs non-competition agreements. Notably, the law adds requirements to the enforceability and validity of non-competition agreements, and importantly, now allows courts to “blue-pencil” non-competition agreements, overturning Nevada Supreme Court’s recent decision in Golden Road Motor Inn, Inc. v. Islam.

First, the new law establishes that a non-competition agreement is void and unenforceable unless the agreement satisfies four requirements. The agreement must: (1) be supported by valuable consideration; (2) not impose a restraint greater than what is required to protect the employer; (3) not impose an undue hardship on the employee; and (4) impose restrictions that are appropriate in relation to the valuable consideration supporting the agreement. Continue Reading Nevada Enacts New Non-Compete Law