New Jersey may be next up to join the growing number of states that significantly restrict the use of non-competition agreements in employment. As we discussed back in December 2017, a bill proposed in New Jersey at the time, Senate Bill 3518, would “impose significant restrictions and limitations” on the use of restrictive covenants in … 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
On November 14, 2019, the U.S. Senate Committee on Small Business and Entrepreneurship held a hearing to examine recently proposed bills that would regulate non-compete agreements at the federal level. Discussion during the hearing indicates that it may have the necessary support to move forward. Pending Non-Compete Legislation On October 15, 2019, Senators Chris Murphy … 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
On May 8, 2019, Washington Governor Jay Inslee signed into law HB 1450, described as “AN ACT Relating to restraints, including noncompetition covenants, on persons engaging in lawful professions, trades, or businesses[.]” While the Act does not take effect until January 1, 2020, its restrictions apply retroactively to existing agreements signed before that date. Our article … Continue Reading
Last year, Democrats in the United States Senate and House of Representatives introduced bills — S.2782 and H.R.5631 — banning non-compete agreements in the vast majority of workplaces across the country. Although those bills failed to gain traction, the authors of this Blog anticipated a renewed effort at federal non-compete reform in 2019, with Democrats taking control … 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
Answering a question left from a previous appeal in the same case, a divided panel of the U.S. Court of Appeals for the Ninth Circuit has concluded that a settlement agreement provision between a physician and his former employer, the California Emergency Physicians Medical Group (“CEP”), constituted a “restraint of a substantial character” on the … Continue Reading
Just before midnight on July 31, 2018, the last day of its legislative session, the Massachusetts Legislature passed a significant bill regulating the use of non-compete agreements in the Commonwealth. Today, August 10, 2018, Governor Charlie Baker signed that bill into law. In an article dated August 1, 2018, we examined the key aspects of … Continue Reading
Just before midnight on July 31, 2018, the Massachusetts Legislature passed a bill regulating the use of non-compete agreements in the Commonwealth. This development is a long time coming, as the Legislature had been attempting for nearly a decade to create a non-compete law. In an article posted on our website on August 1, 2018, Erik … Continue Reading
On April 20, 2018, Jackson Lewis published an article entitled, “Brazilian Labor Courts Continue to Emphasize Importance of Non-Compete Clause Limitations,” by John Sander and Maya Atrakchi in the New York City office. John currently serves as Chairman of L&E Global, a global alliance of premier employer’s counsel firms. Our colleague Gabriela Lima Arantes at … Continue Reading
This Blog has previously covered the six non-compete bills that were introduced in the Massachusetts Legislature in 2017 (See articles dated December 27, 2017, and March 2, 2018). On April 17, 2018, the Joint Committee on Labor and Workforce Development submitted a revised bill, House Bill 4419 (“H 4419”), in place of the prior bills. … Continue Reading
In the past week, two states have made modifications to their respective non-compete laws. On March 27, 2018, Utah imposed special restrictions on the use of non-compete agreements in the broadcasting industry. One day later, Idaho modified the standard of proof that must be followed when a company seeks an injunction against a former employee … Continue Reading
On December 27, 2017, we wrote about the Massachusetts Legislature’s efforts to regulate the use of non-compete agreements, including three bills that sought to require post-separation “garden leave” payments to former employees while they were restricted from engaging in competitive activities. Less than one month later, news reports suggested that negotiators in the Joint Committee … Continue Reading
In October and November of this past year, we wrote about two Minnesota court decisions – Mid-America Business Systems v. Sanderson et al., Case No. 17-3876 (Dist. Minn. Oct. 6, 2017) and Safety Center, Inc. v. Stier, Case No. A17-0360 (Minn. App., Nov. 6, 2017) — that addressed the adequacy of consideration that is provided … Continue Reading
In the final month of 2017 we discussed efforts by the Massachusetts and New Jersey legislatures to limit the use of employment non-compete agreements. By the start of 2018, the spike in activity had become a trend, with Pennsylvania, New Hampshire and Vermont introducing non-compete legislation of their own. In an article posted on our … Continue Reading
The Massachusetts Legislature has spent the past several years seeking to regulate the use of restrictive covenant agreements in the Commonwealth. Despite repeatedly falling short in that initiative, the 2017 legislative session strongly signaled the Legislature’s enduring interest in this subject by introducing a whopping eight new competing bills. In an article posted on our … 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
A bill in the New Jersey Senate, Senate Bill 3518 (“SB 3518”), and an identical companion bill in the New Jersey Assembly (Assembly Bill 5261), would significantly curtail the use of non-compete agreements in New Jersey. In an article posted on our website, Cliff Atlas, Kevin Miller and Colin Thakkar analyze SB 3518 and pose … Continue Reading
Last month, this Blog highlighted a Minnesota decision evaluating the consideration required for non-compete agreements entered into after the commencement of employment. As that decision held, such agreements must be supported by valuable consideration over and above continued employment. This month, in Safety Center, Inc. v. Stier, Case No. A17-0360 (Minn. App., Nov. 6, 2017), 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
The Minnesota federal district court recently refused to enforce a non-compete agreement, in part, because the employer failed to establish that the agreement was supported by valuable consideration. The decision, issued on October 6, 2017 in Mid-America Business Systems, v. Sanderson et. al., Case No. 17-3876, serves as an important reminder that, in Minnesota, 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
In a recent decision examining Kansas non-compete law, the United States District Court for the District of Kansas partially granted a company’s motion to enjoin its former employee’s violations of the non-compete and customer non-solicitation provisions of his employment agreement. The decision, in the matter of Servi Tech, Inc. v. Olson, highlights a number of key … Continue Reading
