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
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
There is no denying that social media continues to transform the way companies conduct business. In light of the rapid evolution of social media, companies today face significant legal challenges on a variety of issues ranging from employee privacy and protected activity to data practices, identity theft, cybersecurity, and protection of intellectual property.
Seyfarth Shaw is pleased to provide you with the 2017–2018 edition of our easy-to-use guide to social media privacy legislation and what employers need to know. The Social Media Privacy Legislation Desktop Reference:
- Describes the content and purpose of the various states’ new social media privacy laws.
- Delivers a detailed state-by-state description of each law, listing a general overview, what is prohibited, what is allowed, the remedies for violations, and special notes for each statute.
- Provides an easy-to-use chart listing on one axis the states that have enacted social media privacy legislation, and on the other, whether each state’s law contains one or more key features.
- Offers our thoughts on the implications of this legislation in other areas, including trade secret misappropriation, bring your own device issues and concerns, social media discovery and evidence considerations, and use of social media in internal investigations.
- Concludes with some best practices to assist companies in navigating this challenging area.
How To Get Your Desktop Reference
To request the 2017–2018 Edition of the Social Media Privacy Legislation Desktop Reference as a pdf or hard copy, please click the button below:
Robert Milligan, along with Certified Forensic Computer Examiner Jim Vaughn, presented The Defend Trade Secrets Act – The Biglaw Partner and Forensic Technologist Perspective webinar for Metropolitan Corporate Counsel on Thursday, November 2. They focused on the key features of the DTSA and compared its key provisions to the state Uniform Trade Secrets Act (UTSA) adopted in many states, and they provided practical tips and strategies concerning the pursuit and defense of trade secret cases in light of the DTSA and some predictions concerning the future of trade secret litigation.
As a conclusion to this well-received webinar, we compiled a summary of takeaways:
- The Defend Trade Secrets Act provides trade secret owners a new federal property right and provides them additional options and remedies when their trade secrets are stolen.
- Employers should consider how they treat employee personally owned devices for work as well as corporate issued mobile devices. Getting access to those devices may prove to be challenging upon an employee’s departure. Having a policy and technology in place to allow the employer to gain access to their data is critical.
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.
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
On May 19, 2017, Texas Governor Greg Abbott signed into law several amendments to the Texas Uniform Trade Secrets Act (“TUTSA”), located in Chapter 134A of the Texas Civil Practice & Remedies Code. The amendments go into effect on September 1, 2017. In doing so, Texas has aligned its statute more closely with federal law and codified recent judicial interpretations of the law.
Two events precipitated the amendments, one legislative, one judicial. In the first, Congress passed the Defend Trade Secrets Act (“DTSA”) in May 2016, which provides a federal cause of action for trade-secret misappropriation. In the second, the Texas Supreme Court announced in In re M-I L.L.C., 505 S.W.3d 569 (Tex. 2016) that a presumption exists that a party is authorized to participate and assist in the defense of a trade-secret misappropriation claim under TUTSA, which presumption cannot be surmounted unless the trial court considers a seven-factor balancing test. These events resulted in the following key changes to the TUTSA: Continue Reading Texas Legislature Clarifies and Expands the Texas Uniform Trade Secrets Act
Seyfarth attorney Joshua Salinas will serve on a panel for “Trade Secrets in 2017: Recent Legal Trends and Developments LIVE Webcast,” presented by The Knowledge Group, LLC Live Webcast Series, on May 25, 2017.
Unquestionably, US companies face an increasing threat of cyberattacks from rival companies and foreign governments and the likely targets are trade secrets and other sensitive business information. Since many US companies have overseas operations, the threat of trade secret theft is on the rise which results to billion-dollar intellectual property (IP) theft losses annually.
To address the perceived insufficient legal protection of trade secrets, lawmakers have enacted a series of laws, such as the Economic Espionage Act of 1996 (EEA) and the Defend Trade Secrets Act (DTSA). The US Congress may also support further law and policy efforts aimed at improving trade secret protection. An increase in criminal enforcement efforts is also expected as President Trump indicates the value he gives on IP protection.
In this two-hour LIVE Webcast, a panel of distinguished professionals and thought leaders organized by The Knowledge Group will help businesses and IP counsel understand the recent legal trends and developments in relation to trade secrets. They will provide a comprehensive outlook for the year ahead and will also underscore best practices in protecting trade secrets.
Key topics include:
- Trade Secret: Current Legal Trends and Developments
- Trade Secret Theft
- Trade Secret Protection under the Trump Administration
- Best Practices to Protect Trade Secrets
- Legislative Outlook
For more information and registration, click here.
Since July 1, 2001, Missouri law with respect to non-solicitation clauses has been fairly straightforward. Specifically, § 431.202 of the Missouri Statutes states that a covenant not to solicit between an employer and an employee is presumed reasonable if it is no longer than one year in duration and designed to protect confidential information, customer relationships, and/or good will. Section 431.202 also states that the statute does not apply to covenants not to compete, thereby allowing the courts to decide the enforceability of a non-competition clause on a “case-by-case” basis. (Id. § 3).
A Bill, however, currently pending in the Missouri House of Representatives seeks to abolish Missouri’s non-solicit statute and ban all restrictive covenants except for those restrictive covenants found in a “business to business” setting. Specifically, House Bill 479, introduced by Representative Keith Frederick (R), seeks to eliminate all types of restrictive covenants (non-compete, non-solicit, and non-hire) except when the restrictive covenants involve the sale of a business or are between two corporations engaged in a joint venture. The Bill would go into effect August 28, 2017. Thus, any restrictive covenant agreement between an employer and an employee that is a) controlled by Missouri law and b) entered into after August 28, 2017 would be unenforceable.
In addition to House Bill 479, a recent Federal Court decision in the Eastern District of Missouri also has the attention of non-compete lawyers. In Durrell v. Tech Electronics, Inc., plaintiff Robert Durrell brought suit against his former employer, Tech Electronics, Inc., alleging that he was wrongfully terminated and retaliated against for taking FMLA leave. Durrell’s Complaint further alleges that the restrictive covenants found in his Employment Agreement are unenforceable due to a lack of consideration. The Court denied Tech’s Motion to Dismiss Durrell’s restrictive covenant claims by ruling that at-will employment is “not a source of consideration under Missouri contract law.” Notably, the Court did not address § 431.202’s specific language that a non-solicitation clause is enforceable if it protects confidential information, customer relationships, and/or good will. In fact, the Court does not even mention § 431.202 in its opinion. (Probably because the Court was only asked to address whether “at-will employment” is sufficient consideration for enforcing a restrictive covenant).
We will continue to monitor House Bill 479 (the Bill is currently in “Executive Session”) as well as the Durrell case, and will provide all relevant updates on this blog.
In Spring 2011, the Georgia legislature passed a new restrictive covenant statute, which, for the first time, allowed Georgia courts in reviewing non-competition agreements between employer and employee to blue-pencil or “modify a covenant that is otherwise void and unenforceable so long as the modification does not render the covenant more restrictive with regard to the employee than as originally drafted by the parties.” O.C.G.A. § 13-8-53(d). Since the new Georgia statute only applies to agreements executed after its enactment, there has been limited litigation concerning the meaning and scope of this provision.
Most of the litigation between 2011 and the present has involved requests by a party that the Court strike an offending provision in a non-compete agreement. Recently, the Northern District of Georgia was given the opportunity to determine whether Georgia’s blue-pencil provision also gives Georgia courts the authority to modify an unenforceable non-compete provision. In LifeBrite Labs., LLC v. Cooksey, No. 1:15-CV-4309-TWT, 2016 WL 7840217, at *1 (N.D. Ga. Dec. 9, 2016), the former employer, LifeBrite, sued its former employee, Cooksey, after she began working for a competitor company. Cooksey’s non-compete provision provided as follows:
7.2. Non-Competition. For as long as she is employed and for a period of one (1) year thereafter, employee shall not participate, directly or indirectly, as an owner, employee, consultant, office management position, in any proprietorship, corporation, partnership, limited liability company or other entity, engaged in any laboratory testing that is being sold by employee on behalf of company.
The Northern District of Georgia found that this provision was overbroad and unenforceable as it did not contain any geographic limitation. Consequently, the Court considered whether or not Georgia’s blue-pencil rules allowed it to modify the non-compete provision to insert a reasonable geographic limitation. In reasoning through the analysis, the Court referred to pre-2011 cases in which Georgia courts interpreted a similar non-compete provision in the context of sale of business agreements. In those cases, Georgia courts held that the blue-pencil marks but it does not write. Thus, the NDGA declined to enforce Cooksey’s non-compete and held that in applying Georgia’s blue-pencil statute, “courts may not completely reform and rewrite contracts by supplying new and material terms from whole cloth.”
The NDGA also noted that Georgia’s employers are “sophisticated entities” which “have the ability to research the law in order to write enforceable contracts; courts should not have to remake their contracts in order to correct their mistakes.” This case is simply further caution to Georgia employers to review their non-competition agreements for overbreadth, vagueness, and the absence of essential limiting terms. As always, the attorneys at Seyfarth Shaw LLP are available to assist in these endeavors.
The LifeBrite Laboratories, LLC v. Cooksey case was dismissed with prejudice on January 25, 2017.