As readers of this blog well know, there is a growing trend of state legislatures seeking to limit or outright ban non-competes. (See here, here, and here as just a few examples of state efforts to curb non-competes—not to mention the proposed federal legislation and international efforts—in the last six months.) Last week, the Washington Senate jumped on the bandwagon by passing a bill with a 30–18 vote that would severely limit the enforceability non-competes. (Similar efforts failed last year, as we reported here.) Some of the key features of this year’s bill are as follows: Continue Reading Washington State Lawmakers Seek to Partially Ban Non-Competes
On March 7, 2019, a group of six United States senators from both sides of the aisle submitted a letter to the Government Accountability Office (GAO) requesting a federal investigation into the use of non-compete agreements on the basis that their widening use in recent years raises concerns about their negative impact on both workers and the national economy. Specifically, the letter asks the GAO to assess the following three questions:
- What is known about the prevalence of non-compete agreements in particular fields, including low-wage occupations?
- What is known about the effects of non-compete agreements on the workforce and the economy, including employment, wages and benefits, innovation, and entrepreneurship?
- What steps have selected states taken to limit the use of these agreements, and what is known about the effect these actions have had on employees and employers?
As we’ve previously written about on this blog, last summer the Massachusetts legislature passed a non-compete reform bill which went into effect on October 1, 2018. Readers of this blog will recall our concerns that the new law is in many ways confusing and may lead to unpredictable results. Now, nearly five months after its effective date, Magistrate Judge Dein of the United States District Court for the District of Massachusetts has issued the first published decision citing the new Massachusetts Noncompetition Agreement Act, Mass. Gen. Laws ch. 149, § 24L—unfortunately, this decision does not analyze an agreement that is subject to the Act, but it does confirm our suspicions that creative practitioners will try to use the new law to attack the enforceability of agreements entered into before the effective date. Continue Reading For the First Time, a Massachusetts Court Weighs in on the New Noncompetition Agreement Act – Well, Sort Of
On February 21, 2019, the New Hampshire Senate, in a bipartisan voice vote and without debate, passed Senate Bill 197, which would prohibit employers from requiring low-wage workers to enter into non-compete agreements, and makes such agreements void and unenforceable.
The Bill applies to “Low-wage employees,” which is defined to include (i) employees who make less than or equal to twice the federal minimum wage, i.e., $14.50 per hour based on the current federal minimum wage of $7.25 per hour; and (ii) “tipped employees” under New Hampshire Revised Statute § 279:21, who make less than or equal to twice the tipped minimum wage (statutorily set at 45 percent of the federal minimum wage), i.e., $6.54 per hour. Continue Reading New Hampshire Senate Seeks to Ban Non-Competes for Low-Wage Workers
The American Intellectual Property Law Association (AIPLA) will host its annual Trade Secret Law Summit at the American Express Company in New York City’s Financial District on March 21-22, 2019.
Seyfarth is a proud sponsor of the Summit, at which partners Erik Weibust (Vice Chair of AIPLA’s Trade Secret Law Committee) will be speaking on Protection of Trade Secrets in the Social Media Era, and moderating a panel on Trade Secrets and Restrictive Covenants in the Financial Services Industry, on which Scott Humphrey will be speaking. Other Seyfarth attendees will include James Yu, Jeremy Cohen, and Dawn Mertineit.
We hope you can join us there. For more information and to register, please click here.
On December 28, 2018, a three-judge panel of the Tenth Circuit Court of Appeals affirmed the holding by the U.S. District Court for the District of Colorado denying the plaintiff’s, DTC Energy Group, Inc. (“DTC Energy”), request for a preliminary injunction against a collective of defendants: former DTC Energy employees Adam Hirschfeld (“Hirschfeld”) and Joseph Galban (“Galban”) and Ally Consulting, LLC (“Ally Consulting”), Hirschfeld’s new employer and a DTC Energy competitor. DTC Energy Grp., Inc. v. Hirschfeld, No. 18-1113, 2018 WL 6816903, at *1 (10th Cir. Dec. 28, 2018). In a majority opinion written by the Honorable Mary Beck Briscoe, the Court held that the trial court did not abuse its discretion in determining that DTC Energy failed to present evidence in support of a preliminary injunction. Id., at *5. In particular, while DTC Energy proffered prior harm as a consequence of Hirschfeld’s past breaches of his employment contract and the individual defendants’ failure to uphold their duty of loyalty, it could show that neither the prior harm established a significant risk of future irreparable harm saddled by DTC Energy nor Hirschfeld currently breached his employment agreement. Id. Continue Reading 10th Circuit Affirms that Employer Failed to Show How Past Harm Signified Future Irreparable Harm in Support of Preliminary Injunction Request in Trade Secret Battle
On Tuesday, February 26, 2019, at 12 p.m. to 2:00 p.m. Eastern, Seyfarth Partner and Trade Secrets, Computer Fraud & Non-Compete Practice Group Co-Chair Robert Milligan is presenting a webinar for myLawCLE, a partner of the Federal Bar Association. The “Latest Developments in Trade Secrets Law and Non-Compete and Non-Solicitation Agreements” webinar covers some of the recent developments in trade secret law and recent legislative and case law trends regarding non-compete and non-solicitation agreements and offers best practices for structuring permissible contracts.
Key topics include:
- Impact of the federal Defend Trade Secrets Act on trade secrets law
- Overview of key trade secret cases involving preemption, damages, and identification
- Current Plaintiff and Defense trade strategies in trade secret litigation
- What are the recent legislative changes and case law decisions affecting restrictive covenants?
- How can employers structure restrictive covenants to comply with new laws and decisions
- Emerging areas in restrictive covenants
For more information and to register, click here.
The 2018 Trading Secrets Year in Review is a compilation of our significant blog posts from throughout the year and is categorized by specific topics such as: Trade Secrets, Computer Fraud and Abuse Act, Non-Compete & Restrictive Covenants, Legislation, International, and Social Media and Privacy. As demonstrated by our specific blog entries, including our Top 10 Developments and Headlines, 2018 Trade Secrets and Non-Competes Webinar Series Year in Review, and our dedicated page concerning DTSA legislation, our blog authors stay on top of the latest developments in this area of law and provide timely and entertaining posts on significant new cases, legal developments, and legislation.
The 2018 Trading Secrets Year in Review also includes links to the recordings of webinars in the 2018 Trade Secrets Webinar Series. More information on our upcoming 2019 webinars is available in the program listing contained in this Review. Our highly successful blog and webinar series further demonstrate that Seyfarth Shaw’s national Trade Secret, Computer Fraud & Non-Competes Practice Group is one of the country’s preeminent groups dedicated to trade secrets, restrictive covenants, computer fraud, and unfair competition matters.
Clients and friends of the firm can request a digital or printed copy of the 2018 Trading Secrets Year in Review below.
In Seyfarth’s first installment in its 2019 Trade Secrets Webinar Series, Seyfarth attorneys Michael Wexler, Robert Milligan, and Joshua Salinas reviewed noteworthy cases and 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 watch for in 2019.
As a conclusion to this well-received webinar, we compiled a summary of takeaways:
- The Supreme Court will soon Rule on the meaning of the terms confidential and trade secrets within the meaning of Exemption 4 to FOIA which may have far reaching implications to trade secret and non-compete practitioners.
- State legislation across the country, including in Idaho, Utah, Colorado, and Massachusetts, continues to narrow or place further conditions on the scope of enforceable restrictive covenants.
- Employers with Massachusetts employees should take care to review choice of law, choice of venue and consideration to support their agreements.
- Employers with California employees should carefully evaluate whether to continue to use post-termination non-solicitation of employee covenants with their employees and contractors and discuss their options with counsel.
- Company owners should be careful to not draw the attention of state attorney generals and the justice department by entering into agreements with competitors regarding the mobility of employees.
The Vermont Legislature kicked off 2019 with bill H.1, seeking to ban non-competes in the Green Mountain State. The new bill has been filed by Martin LaLonde, who promulgated an identical bill last January. The 2018 bill was read and referred to the Committee on Commerce and Economic Development and never made further progress. Rep. LaLonde has a new co-sponsor in 2019, Rep. Annmarie Christensen.
The bill, as drafted, seeks to prohibit all non-compete agreements in the employment context. There are three limited exceptions allowing for parties to enter into an agreement not to compete with a business or similarly restrain a person from engaging a profession, business, or trade, where the sale of a business or dissolution of a partnership or limited liability company is involved. The bill specifically notes that it does not “prohibit an agreement that prohibits the disclosure of trade secrets . . . .”
We will continue to closely monitor proposed legislation in Vermont and across the nation and report back with any updates.