State Non-Compete Legislation Update

We’ve written previously about Washington, DC’s non-compete bill scheduled to take effect on October 1, 2022. While DC Council has pulled back from enactment before to make last-minute revisions to the legislation—most notably in 2021 after the initially-passed bill would have barred non-competes entirely—there appear to be no such changes this time. The currently-enacted bill stands to take effect this
Continue Reading Last Call: DC Non-Compete Bill to Take Effect on October 1

colorado non-compete lawOn August 10, 2022, Colorado’s new statute further restricting non-competition and non-solicitation provisions becomes effective. The new law, which passed earlier this year, continues Colorado’s trend toward increased scrutiny of post-employment restrictions and adds Colorado to the growing list of states that restrict the use of out-of-state choice of law and forum provisions in agreements that contain such restrictions.
Continue Reading Colorado Poised to Further Restrict Post-Employment Restrictions

new jersey state flagOn May 2, 2022, the New Jersey Legislature introduced Bill A3715, adding to the growing number of states seeking to curtail the use of non-compete and non-solicitation agreements by employers. While passage of the bill is uncertain, A3715, if enacted in its current form, would make New Jersey one of the most inhospitable forums for employers seeking to enforce such agreements. Among a number of sweeping changes, including outright banning the use of post-employment restrictive covenants against a broad range of workers and otherwise limiting their duration to a maximum of 12 months, the proposed law further requires employers to pay 100 percent of the separated employee’s wages and benefits during the duration of the restricted period.

Key features of the bill include:
Continue Reading New Jersey Introduces Proposed Legislation Limiting Use and Enforceability of Non-Compete and Non-Solicitation Agreements

The ongoing saga of Washington, DC’s expansive non-compete bill appears to be nearing its end, as the DC Council recently scaled back the originally passed “D.C. Ban on Non-Compete Act of 2020.” While the amended law still imposes significant restrictions on non-compete agreements for employees living or working primarily in DC, the most recent revisions are a step away from the near-total ban on non-competes that the Council originally passed. The new provisions go into effect on October 1, 2022, barring an unlikely veto from Congress or further revisions from the DC Council.
Continue Reading Washington, DC’s Non-Compete Bill Revised Again

Nearly five years ago, the Massachusetts Noncompetition Agreement Act (“MNAA”, also sometimes abbreviated as the “MNCA”) went into effect. That statute ushered in new requirements for non-competes in the Bay State (including not only residents of Massachusetts, but also those who are merely employed in Massachusetts). Among the MNAA’s requirements is a forum selection provision that purports to require civil suits related to non-competes to be brought exclusively in the county in which the employee resides, or if both parties agree, in Suffolk county in Massachusetts.

Despite being in effect for nearly a half-decade, there have been relatively few published cases interpreting the MNAA (see here and here for a synopsis of a couple of those cases). Recently, however, a federal judge in Virginia weighed in on the statute’s forum requirement, determining that a suit against a Massachusetts employee could proceed in federal court in the Eastern District of Virginia, rather than be dismissed and re-filed in Massachusetts.
Continue Reading Massachusetts’ “Provincial” Forum Selection Requirement May Not Trump Reasonable Foreign Forum Selection Clause

Recently, we wrote about New Hampshire’s attempts to piggyback on Massachusetts’ material change doctrine. In this post, we’re taking a look at Connecticut’s latest legislative effort to limit non-competes—House Bill 5249.

In many ways, HB 5249 borrows from Massachusetts’ 2018 bill (although unlike the New Hampshire bill, it doesn’t tackle the material change doctrine). For example, like the Massachusetts Noncompetition Agreement Act, the law would limit non-competes to a geographic area commensurate with where the employee works during the last 2 years of their employment, and to the kinds of work the employee performs during those 2 years. The duration of a non-compete would typically be limited to no longer than one year like under Massachusetts law, except that the Connecticut bill would permit a covenant of up to two years where the employer pays the employee’s base salary and benefits.
Continue Reading It’s Déjà Vu All Over Again—Connecticut Borrows Heavily from Massachusetts Law in Proposed Non-Compete Legislation

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

On March 24, 2022, Washington state Governor Inslee signed into law Engrossed Substitute House Bill 1795 (The Silenced No More Act) (“ESHB 1795”). Washington now becomes the second state (after California) to render nondisclosure and nondisparagement provisions illegal in employment agreements.
Continue Reading Governor Inslee Signs “Silenced No More Act” Prohibiting Nondisclosure and Nondisparagement Provisions In All Employment Agreements In Washington