State Non-Compete Legislation Update

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

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

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

The ongoing saga of DC’s controversial Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”) logged another chapter last week when the DC Council passed a further amendment delaying the effective date of the Act from April 1, 2022, until October 1, 2022. The Act, which was originally passed in December 2020, would prohibit employers from utilizing non-compete agreements, a statutory ban which has been adopted in certain other states, but would also prohibit employers from utilizing anti-moonlighting provisions or other “duty of loyalty” policies for DC employees. This latter prohibition would be a first-of-its-kind ban, and would prohibit employer policies which are generally viewed as both reasonable and non-controversial, even in states that have taken a negative view toward post-employment restrictive covenants.
Continue Reading The Effective Date of DC’s Non-Compete Ban Delayed Yet Again

restricive-covenenat-legislation-trendsOver the past 10–15 years, we have seen an explosion of legislative activity related to restrictive covenants. This activity is happening not only in state legislatures but on the federal level as well. While each proposal is different, we’ve certainly seen trends emerge, including required notice provisions, fee shifting, and choice of law and venue requirements.

One of the most prevalent trends is the move towards banning non-competes (and sometimes, other restrictive covenants) for so-called “low-wage workers.” To date, 10 states have implemented a low-wage ban of sorts: Illinois, Maryland, Maine, Massachusetts, Oregon, Nevada, New Hampshire, Rhode Island, Virginia, and Washington.[1]
Continue Reading More States Eye Low-Wage Non-Compete Bans

In the first program in the 2022 Trade Secrets Webinar Series, Seyfarth attorneys Michael Wexler, Robert Milligan, and James Yu reviewed noteworthy legislation, cases, and other 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
Continue Reading Webinar Recap! 2021 Trade Secrets & Non-Competes Year in Review

Yet another state has made it harder for businesses to implement restrictive covenants—this time with criminal penalties.

Colorado’s restrictive covenants statute already provides that it is unlawful to “use force, threats, or other means of intimidation to prevent any person from engaging in any lawful occupation,” and further states that non-competes are invalid unless they fall into one of four categories:

  1. Covenants made in connection with the purchase and sale of a business (or the assets of a business);
  2. Covenants made for the protection of trade secrets;
  3. Covenants for the recovery of expenses incurred in educating and training employees who were employed for less than 2 years; and
  4. Covenants for executive and management personnel (and their professional staff) and officers.

That has been the law in Colorado for years—but a new, draconian portion of the statute will go into effect in just over a month.
Continue Reading Colorado Criminalizes Attempts to Curb Competition

What You Need to Know about the Recent Cases and Developments in Trade Secrets, Restrictive Covenants, and Computer Fraud

Thursday, January 27, 2022
2:00 p.m. to 3:00 p.m. Eastern
1:00 p.m. to 2:00 p.m. Central
12:00 p.m. to 1:00 p.m. Mountain
11:00 a.m. to 12:00 p.m. Pacific

REGISTER HERE

In the first installment of the 2022 Trade Secrets Webinar Series,
Continue Reading Upcoming Webinar! 2021 Trade Secrets & Non-Competes Year in Review