In the third installment of our 2021 Trade Secrets Webinar Series, Seyfarth attorneys Dan Hart, Kevin Young, and Cary Burke outlined the connection between wage and hour law and restrictive covenant law. We addressed how these important and impactful areas of employment law intersect and can, if not managed appropriately, create layered and compounding risks for employers. We also addressed practical tips for managing those risks, such as conducting proactive audits and considering arbitration clauses.

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

  • Wage and hour lawsuits continue to be one of most common types of employment lawsuits that employers face.
  • Meanwhile, with data being more important, and more accessible to employees, than ever before, restrictive covenants remain one of the most important tools in an employer’s toolkit.
  • Even if not obvious, these two forces—wage and hour lawsuits on the one hand and restrictive covenants on the other—can converge and feed one another. Many states, for example, expressly or implicitly look to statutory overtime exemptions to define which types of workers may be bound by a non-compete promise. Other states limit non-compete covenants to employees who earn compensation above a certain level or perform duties that are typically associated with exempt employees.
  • Given the potential for a restrictive covenant action to feed an exempt misclassification claim, or vice versa, it is important for employers to take proactive steps to ensure proper classification of employees. In addition, multi-state employers relying on restrictive covenant agreements are well-served to periodically assess their standard restrictive covenant agreements to ensure consistency with state-specific laws, including laws restricting the types of employees who may be bound by such an agreement.

Because of the ever-evolving nature of restrictive covenants and wage and hour law, it is more important than ever for employers to stay abreast of the latest legal developments to ensure that the company’s template restrictive covenant agreements are compliant with applicable laws and meet business needs without posing unintended risks. If your company has not recently reviewed and revised its template restrictive covenant agreements, please contact a member of Seyfarth’s Trade Secrets, Computer Fraud & Non-Competes practice group for help.

Next Thursday, June 24, at 12:00 a.m. Eastern/9:00 a.m. Pacific, Seyfarth partner Dawn Mertineit will present a live webcast discussing Lex Machina’s Trade Secret Litigation Report for 2021. Dawn will join Morgan Lewis’s Seth Gerber and one of Lex Machina’s legal content associates and co-author of the report, Gloria Huang, to discuss the key trends in the report, including the number of trade secrets case filings, average timing for various stages of litigation, most active law firms and parties, and more. And stay tuned for a follow-up blog discussing the report’s key findings.

More details and a registration link can be found here.

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

The 2021 edition of The Legal 500 United States recommends Seyfarth Shaw’s Trade Secrets group as one of the best in the country. Nationally, for the sixth consecutive year, our Trade Secrets practice earned Top Tier.

Based on feedback from corporate counsel, Seyfarth partners Michael Wexler, Robert Milligan, and Kate Perrelli are ranked in the editorial’s “Leading Lawyers,” Joshua Salinas is ranked in the editorial’s “Rising Starts,” and Erik Weibust and Dawn Mertineit were also recommended in the editorial.

The Legal 500 United States is an independent guide providing comprehensive coverage on legal services and is widely referenced for its definitive judgment of law firm capabilities. The Legal 500 United States recognizes and rewards the best in-house and private practice teams and individuals over the past 12 months. The awards are given to the elite legal practitioners, based on comprehensive research into the US legal market.

Wednesday, June 22, 2021
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

REGISTER HERE

In this fourth installment of our 2021 Trade Secrets Webinar Series, our team will cover recent legal developments in Texas trade secret and non-compete law and how it is similar to and diverse from other jurisdictions. The webinar will also cover how these latest developments impact counseling, litigation, and deals involving companies with employees based in Texas.

The panel will discuss:

  • How to define and understand trade secrets in Texas, including recent legal developments regarding the protection of ideas and confidential information
  • Texas’s policy on employee non-compete provisions and recent cases addressing non-compete, non-solicitation, and no hire agreements
  • How to effectively protect trade secrets and conduct trade secret investigations
  • Recent cases regarding alleged bad faith prosecution of trade secret claims
  • How forum selection, choice of law and arbitration clauses may affect non-compete and non-disclosure agreements
  • Effectively utilizing non-compete and other restrictive covenants in business deals in Texas

Speakers
Jesse Coleman, Partner, Seyfarth Shaw LLP
Matthew Simmons, Senior Counsel, Seyfarth Shaw LLP
Kevin Green, Associate, Seyfarth Shaw LLP

If you have any questions, please contact Colleen Vest at cvest@seyfarth.com and reference this event.

This webinar is accredited for CLE in CA, IL, NJ, and NY. Credit will be applied for as requested for TX, GA, WA, NC, FL and VA.  The following jurisdictions accept reciprocal credit with these accredited states, and individuals can use the certificate they receive to gain CLE credit therein: AZ, CT, ME, NH.  The following jurisdictions do not require CLE, but attendees will receive general certificates of attendance: DC, MA, MD, MI, SD.  For all other jurisdictions, a general certificate of attendance and the necessary materials will be issued that can be used in other jurisdictions for self-application. If you have questions about jurisdictions, please email CLE@seyfarth.com

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 and Federal Legislative Developments,” along with C. Max Perlman and moderator Russell Beck. Then at 10:30 AM Eastern, Kate (who was on the Advisory Committee planning the conference) will be a panelist on the “Life Cycle of a Key Employee Departure” session, where she will be joined by panelists Barbara Robb, Michael Rosen, and Jacquelyn White, Assistant General Counsel, Global Labor & Employment at Vertex Pharmaceuticals, along with moderator Erik Winton.

Other panels at the conference include “Trade Secrets and Restrictive Covenants: A View from the Bench,” featuring 4 federal and state court judges, as well as “Trade Secret Protection Programs: What Companies and their Advisors Need to Know Now.”

More details on the program can be found here, including a link to register for the conference.

In a long-awaited decision, the Supreme Court resolved a circuit split about whether an individual with access to a computer system violates the Computer Fraud and Abuse Act (“CFAA”) by accessing information for an improper purpose. By a 6-3 decision authored by Justice Barrett, the Court held that an individual does not “exceed authorized access” within the meaning of the CFAA by misusing access to obtain information that is otherwise available to that person. While the case heard by the high court was a criminal case involving a former law enforcement officer’s criminal conviction, the decision nonetheless has broad ramifications for trade secrets and restrictive covenant litigation, as CFAA claims were often brought against employees who misused access rights to misappropriate information. The CFAA is a criminal statute that also provides a civil remedy, and CFAA claims were commonly raised to acquire federal subject matter jurisdiction, especially prior to the enactment of the Defend Trade Secrets Act in 2016, which provided an independent private cause of action in federal court for trade secret misappropriation. Continue Reading Supreme Court Resolves Circuit Split on Access Under Computer Fraud and Abuse Act

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 (Rule 1.6) and successive representation rules (Rule 1.9) affect the practical impact of Rule 5.6.
  • Traps for the unwary lawyer representing parties involved in noncompete matters, including whether you can ethically draft a noncompete for a company with a nationwide workforce, whether you can ethically draft a noncompete that is going to be used for its in terrorem effect, and whether you can—and should—represent both the new employer and the employee it just hired.

Erik will be joined on the panel, which is being moderated by Nicole Daly, by Russell Beck and Peter Steinmeyer.

Additional information and registration available here.

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:

  1. 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;
  2. 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;
  3. The employee’s gross annual salary and commissions at the time of termination exceeds the median family income for a four-person family; and
  4. The duration of non-compete duration could not exceed 18 months.

Continue Reading Oregon Blazes a Trail of Non-Compete Amendments

Seyfarth partner and Trade Secrets, Computer Fraud & Non-Competes co-chair Robert Milligan was recently interviewed for an article in Law360, entitled “Defend Trade Secrets Act: 5 Years Later, Here’s What We Know.” The article provides an overview of the DTSA, the goals the DTSA, and what has changed and what has remained the same in the five years since the DTSA’s passage.

The full article can be read on the Law360 website.