When one thinks of a “reasonable” temporal scope for a restrictive covenant between employer and employee, usually that period is measured in months or years, not decades. But as a recent North Carolina decision reminds us, context is everything, and a 10-year restriction can be enforceable in the right circumstances. In KNC Techs., LLC v. … Continue Reading
Texas courts are increasingly encountering efforts to challenge restrictive covenant agreements on free speech grounds, where the restricted activity includes business-related communications. A recent Texas appellate court decision indicates that this strategy has its limits. In Hieber v. Percheron Holdings, LLC, No. 14-19-00505-CV (Tex. App.—Houston [14th Dist.] Nov. 14, 2019), Percheron Holdings, LLC (“Percheron”) sued … Continue Reading
Over the past few years, legislators and government agencies at both the state and federal levels have pushed reforms limiting the use of non-competes and other restrictive covenants by U.S. businesses. Some of those efforts have extended to covenants that restrict a party’s ability to solicit and/or hire employees who are not party to the … Continue Reading
On August 26, 2019, the Delaware Chancery Court invalidated a California employee’s customer and employee non-solicitation covenant on the grounds that it violated California law. In doing so, the Court rejected the plaintiff company’s attempt to override California law by including a Delaware choice of law provision in the underlying agreement. Background We initially reported … Continue Reading
A decision from the Northern District of Illinois is the latest to reiterate a stern warning we have long highlighted for employers: when insufficient steps are taken by an employer to protect its own proprietary information, courts will not provide trade secret protection when such information is misappropriated. In Abrasic 90 Inc. v. Weldcote Metals, … Continue Reading
When implementing restrictive covenant agreements in their workforces, companies often grapple with how best to handle the wide variation in the law from one state to the other. One solution is to include a choice of law provision that calls for all agreements to be construed under the laws of a single state. Still, there … Continue Reading
On January 19, 2018, a divided Wisconsin Supreme Court held that an employee non-solicitation covenant was overly broad and unenforceable under state law. In the decision, entitled The Manitowoc Company, Inc. v. Lanning, Case No. 2015AP1530 (Wisc. Jan. 19, 2018), the Court confirmed Wisconsin Statute §103.465, which governs covenants not to compete, extends to agreements … Continue Reading
In states that permit the enforcement of non-compete and other restrictive covenant agreements against former employees, companies must still demonstrate that the restrictions are designed to protect a legitimate business interest, and not to simply avoid ordinary competition. In Osborne Assocs. v. Cangemi, Case No. 3:17-cv-1135-J-34MCR (M.D.Fla. Nov. 14, 2017), the federal court for the … Continue Reading
It is axiomatic that a contract requires consideration to be binding. Ordinarily, courts only inquire into the existence, but not the “adequacy,” of consideration. Illinois courts, however, also scrutinize the adequacy of consideration when it comes to determining whether restrictive covenant agreements qualify as an enforceable contract. Absent adequate consideration for the restrictive covenant, there … Continue Reading
In Florida, non-competition and other restrictive covenant agreements are enforceable to the extent they are tailored to protect a legitimate business interest. On September 14, 2017, the Florida Supreme Court held that a company’s relationships with business referral sources may constitute a protectable business interest – White v. Mederi Caretenders Visiting Services of Southeast Fla., … Continue Reading
Nebraska’s legal history on the enforceability of non-compete agreements is usually a surprise for employers who view Nebraska as pro-business. Nebraska courts routinely invalidate employee non-compete agreements that venture beyond restricting the employee from doing business with and soliciting customers with whom that employee did business and had personal contact. If there is a non-compete component … Continue Reading
Employers sometimes worry whether seeking to enforce their non-competes in some circumstances but not others might preclude enforcement altogether in the future. Not so, says one court. Applying Ohio law, the United States District Court for the Western District of Tennessee, in GCA Services v. ParCou, held in a discovery ruling that information regarding an … Continue Reading
For all the court decisions out there interpreting non-competition restrictions and customer or client restrictions, case law regarding non-solicitation of employees restrictions can be a little hard to find. At the link below is a report about a new decision from the Wisconsin Court of Appeals — written by our colleague in Madison, Sharon Mollman Elliott … Continue Reading
A California court recently upheld an employer’s right to condition free training on continued employmentin the matter of USS-POSCO Industries v. Case, No. A140457 (Jan. 26, 2016). The defendant/appellant in the litigation, USS POSCO Industries (“UPI”) had originally hired Case as an entry-level Laborer and Side Trim Operator. UPI faced a shortage of skilled Maintenance … Continue Reading
Jackson Lewis has prepared an end-of-the-year review of four non-compete and confidentiality issues to watch in 2016 on its website. Clifford R. Atlas, co-chair of the firm’s non-compete and unfair competition practice group, and attorney Puja Gupta from the firm’s Baltimore office, identify four developments to keep an eye on next year: 1. Enforceability of choice of … Continue Reading
The Pennsylvania Supreme Court has ruled that a non-compete signed during the course of employment, without additional consideration, is not enforceable even though the agreement stated that the parties “intend to be legally bound.” Socko v. Mid-Atlantic Systems of CPA, Inc. Douglas G. Smith, Melissa L. Evans and David E. Renner from our Pittsburgh office … Continue Reading
In a detailed, 26-page published decision in the matter of Cardoni v Prosperity Bank, No. 14-20682 (5th Cir. Oct. 29, 2015) the Fifth Circuit Court of Appeals took a deep look at choice of law provisions in restrictive covenants. The Appellate Court started out by noting that in addition to their well-known disagreements over boundaries and … Continue Reading
