Since we last wrote about DC’s sweeping ban on non-competes (the “Act”), there have been many questions and concerns, not surprisingly. And now those have spilled over into deliberations before the DC Council, leading to Councilmember Elissa Silverman’s introduction of the Non-Compete Conflict of Interest Clarification Amendment Act of 2021 on May 21, 2021. Councilmember Silverman and others hope to limit the new non-compete law before it gets funded with an effective date of March 16, 2021. While helpful, the Silverman proposals are extremely limited in scope, and so others have chimed in, leading to a potential delay of the Act’s implementation.
Continue Reading District of Columbia Councilmembers Seek Clarification on Non-Compete Ban
Erik Weibust to Present “The Ethics of Noncompetes” for Thomson Reuters
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
Oregon Blazes a Trail of Non-Compete Amendments
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:
- 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;
- 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;
- The employee’s gross annual salary and commissions at the time of termination exceeds the median family income for a four-person family; and
- The duration of non-compete duration could not exceed 18 months.
Continue Reading Oregon Blazes a Trail of Non-Compete Amendments
California Court of Appeal Extends the Reach of Section 16600 to Upset Arbitration Award Because of Alleged Overly Broad Confidentiality Provisions
In an expansive recent ruling, the California Court of Appeal in Brown v. TGS Management Co., LLC reversed a judgment confirming an arbitration award, examining the arbitrator’s findings, and ultimately invalidating a confidentiality provisions in an employment agreement under Business and Professions Code section 16600 on the grounds that they operated as a “de facto noncompete provision” and were “void ab initio and unenforceable.” The court’s decision, upholding the state’s long-standing policy in favor of employee mobility, offered a harsh word of caution for employers that use overly broad confidentiality provisions and other restrictive covenants with their California employees.
Continue Reading California Court of Appeal Extends the Reach of Section 16600 to Upset Arbitration Award Because of Alleged Overly Broad Confidentiality Provisions
Fifth Circuit Holds that Reformation of Texas Non-Competes Is Authorized, and Perhaps Required, at Preliminary Injunction Stage
Decision overview
On August 7, 2020, the Fifth Circuit addressed an issue presently undecided by the Texas Supreme Court; namely, whether reformation of an overbroad non-compete restriction is appropriate, and perhaps even required, at the preliminary injunction stage or must occur as a remedy after trial upon the merits.
In reversing and remanding the contrary lower court decision that declined to reform an overboard non-compete due to an inadequate record, the Fifth Circuit held that reformation of an overly broad covenant not to compete agreement was warranted at the preliminary injunction stage. Calhoun v. Jack Doheny Companies, Inc., No. 20-20068, — F.3d —, 2020 WL 4557641 (5th Cir. Aug. 7, 2020).
Continue Reading Fifth Circuit Holds that Reformation of Texas Non-Competes Is Authorized, and Perhaps Required, at Preliminary Injunction Stage
Louisiana Expands its Non-Compete Statute in Favor of Companies
In a strengthening of company contractual rights, the Louisiana Legislature recently expanded its state non-compete statute by permitting a corporation, partnership, or limited liability company to enter into agreements with their shareholders, partners, or members, respectively, that prevent them from becoming employees of a competing company under certain circumstances.
Continue Reading Louisiana Expands its Non-Compete Statute in Favor of Companies
Massachusetts Superior Court Axes an Attempt to Expand the Scope of the Seminal Non-Compete Law Concerning Material Change in Employment
The Massachusetts Superior Court recently held in Now Business Intelligence, Inc. v. Donahue that a temporary reassignment during a business slowdown, consisting of the addition of certain non-billable duties, does not constitute a material change invalidating a non-compete agreement. The dispute centered on Now Business Intelligence, Inc.’s (“NBI”) ability to hold its former employee, Sean Donahue (“Donahue”), liable for breach of his covenant not to compete.
Continue Reading Massachusetts Superior Court Axes an Attempt to Expand the Scope of the Seminal Non-Compete Law Concerning Material Change in Employment
No Good Deed Goes Unpunished: Return to Work May Mean Reduced Protections for Trade Secrets and Customer Goodwill
Tens of millions of employees have been laid off or furloughed as a result of the COVID-19 pandemic. Now that the reopening process has begun in most states, many of those employees are being rehired and reactivated. For the month of May 2020, the unemployment rate actually started to decline after the massive increase over the prior few months, as businesses began the return to normal and employers who obtained relief from the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) restored their workforces to pre-pandemic levels in order to secure loan forgiveness.
One thing that employers may not be considering when they rehire laid off or furloughed employees is what impact this has on prior restrictive covenant agreements with those employees. We previously discussed whether non-competes are enforceable against employees who are laid off. But what about employees who are laid off and then rehired, or furloughed and then reactivated? Are restrictive covenant agreements signed by employees prior to the layoffs or furloughs still enforceable if they ultimately leave and join a competitor down the road? The answer depends on whether the employee was technically, even if temporarily, laid off rather than furloughed, and what state’s law applies.
Continue Reading No Good Deed Goes Unpunished: Return to Work May Mean Reduced Protections for Trade Secrets and Customer Goodwill
Erik Weibust and Michael Kippins to Present Trade Secret Webinar for the Boston Bar Association
On June 10, 2020, at 2:00 p.m. Eastern, Erik Weibust and Michael Kippins will be presenting a free webinar for the Boston Bar Association entitled “Protecting Trade Secrets in the Face of Remote Workforces, New Technology, and Laid Off Employees.”.
As a result of the COVID-19 pandemic and in response to what many are calling
Preventing the “Face” of Your Company from Doing an About-Face for a Competitor
We previously wrote about whether Peloton instructors are (or should be) subject to non-compete agreements owing to their prominent role as the “face” of the company. Today, we take a look at another “face” of Peloton (and other companies), as we consider the use of restrictive covenants for paid corporate spokespeople, such as actors who appear in company ads and “influencers” who use their social media popularity to promote products.
Continue Reading Preventing the “Face” of Your Company from Doing an About-Face for a Competitor