The Illinois Workplace Transparency Act (WTA) (Public Act 101-0221) is designed to protect employees, consultants, and contractors who truthfully report alleged unlawful discrimination and harassment or criminal conduct in the workplace by prohibiting nonnegotiable confidentiality obligations, waivers, and mandatory arbitration of allegations of discrimination, harassment, or retaliation.
The Massachusetts Supreme Judicial Court (SJC), the Commonwealth’s highest court, recently clarified the standards applicable to analyzing nonsolicitation and anti-raid restrictive covenants following the sale of a business—an area of law where state appellate court jurisprudence had been lacking.
On December 3, 2019, in Heraeus Medical, LLC v. Zimmer, Inc., the Indiana Supreme Court reaffirmed the “blue pencil doctrine,” likening the doctrine to an eraser and stating that Indiana courts may only delete language from overbroad restrictive covenants; they cannot reform or add to such agreements.
The Louisiana Second Circuit Court of Appeal recently held that a noncompetition provision under La. R.S 23:921 affecting a former member of an accounting limited liability company (LLC) could be reformed when the scope of the defined business and geographic limitation was overly broad.
A new state law in Maryland now prohibits employers from requiring low-wage employees to enter into noncompete agreements. Maryland Senate Bill 328, which took effect on October 1, 2019, prohibits employers from obligating any employee who earns less than $15.00 per hour or $31,200 per year from entering into an agreement that restricts the employee’s ability to work with a new employer in the same or similar business.
As 2020 approaches, employers in New England may want to review their noncompetition agreements to determine whether they comply with recently enacted laws in Rhode Island and New Hampshire.
On August 29, 2019, legislators from the Michigan House of Representatives announced an ambitious package of 12 bills aimed at creating new criminal and civil penalties to combat employers that fail to properly pay wages and overtime pay. The legislation would also establish enhanced protections and penalties under Michigan’s whistleblower statute and create new civil remedies against employers for overzealous enforcement of noncompete agreements and for misclassifying employees as independent contractors.
On April 15, 2019, the Indiana Court of Appeals issued a ruling that significantly developed restrictive covenant law in two areas: whether courts may reform contracts (as opposed to blue-penciling them) and whether non-solicitation provisions can include prospective customers.
On July 3, 2019, in a long-awaited judgment the Supreme Court of the United Kingdom clarified the correct approach to deciding whether words can be severed from a post-employment covenant to leave an employee bound by the remainder of the covenant.
A recent Supreme Court case determined that private commercial and financial information that is transmitted to the federal government under an assurance of privacy is considered “confidential” and not subject to disclosure under the Freedom of Information Act (FOIA). The decision could provide some valuable safeguards for employers concerned about protecting sensitive data from public disclosure.
Lawmakers in Maine closed out the 2019 legislative session with a flurry of activity. Legislators passed more than 500 bills this year, including 50 on the final day, with many targeting the state’s employment laws.
On May 14, 2019, Oregon Governor Kate Brown signed House Bill (HB) 2992, which imposes a new burden on employers that want to have enforceable noncompetition agreements with their Oregon employees. For any noncompetition agreement entered into on or after January 1, 2020, employers must provide employees with a signed, written copy of the terms of the noncompetition agreement within 30 days after the termination of employment.
On May 8, 2019, Washington State Governor Jay Inslee signed new restrictions on noncompetition covenants for Washington employees. The new restrictions are effective January 1, 2020.
After several years of failed attempts, the state of Washington passed a law on April 17, 2019 that will significantly limit the enforceability of noncompetition agreements under Washington law. Governor Jay Inslee has not yet signed the act into law, but it is expected that Governor Inslee will promptly do so.
The hiring process can be one of the most stressful steps of any employment relationship. As the employer, you are opening your doors to somebody who is hopefully going to contribute to your company’s success. Moreover, hiring is a process that requires both time and money. Thus, employers often want to expedite the hiring process.
Texas law allows for the enforcement of covenants not to compete that impose reasonable restrictions on competition.
New technologies that enable temporary staffing candidates to find positions via applications that use algorithms to match people to positions, are here. With names like tilr and Shiftgig, these apps use an alternative, temporary, or on-demand staffing model akin to that used by ride-sharing apps to connect passengers with drivers.
With Massachusetts’s comprehensive noncompete law taking effect on October 1, 2018, many employers are reviewing and likely revising their restrictive covenants to ensure that they are compliant with the new law.
When employees leave a company—whether it is due to a voluntary or involuntary separation—their former employers may worry about the security of the company’s confidential information and trade secrets.
The Massachusetts Legislature has passed legislation governing the use of noncompetition agreements in Massachusetts. Governor Charlie Baker is expected to sign the legislation into law by August 10, 2018. Assuming that occurs, the law will codify existing Massachusetts case law to some degree, and it also will go much further in regulating the enforceability of noncompetition agreements, including limiting who may be subject to such agreements.
In the most recent step in a decade-long effort to enact comprehensive noncompete legislation, the Massachusetts Senate on July 25, 2018, passed an economic development bill containing amendments to Chapter 149 of the Massachusetts General Laws to regulate the use of noncompetition agreements.
The Massachusetts legislature is once again seeking to enact comprehensive noncompetition legislation to rein in the use, and some may argue the abuse, of restrictive covenants in employment agreements.
Many employers want to prevent their trusted employees from leaving the company and poaching their employees. In Manitowoc Company, Inc. v. Lanning, No. 2015AP1530 (January 19, 2018), the Supreme Court of Wisconsin examined a non-solicitation provision prohibiting Manitowoc Company’s former employee, Lanning, from “directly or indirectly soliciting, inducing, or encouraging any employee of Manitowoc Company to terminate his or her employment with Manitowoc Company or to accept employment with a competitor, supplier, or customer of Manitowoc Company.” Lanning, a “successful, knowledgeable, and well-connected” 25-year employee of Manitowoc, left the company to go work for a competitor. He then contacted at least nine Manitowoc employees about potential employment opportunities with his new employer, took one Manitowoc employee out to lunch, took one Manitowoc employee on a tour of the competitor’s plant in China, and participated in another Manitowoc employee’s job interview with the competitor.
Three prominent financial services companies recently announced their withdrawal from the Protocol for Broker Recruiting, an agreement among securities firms regulating the conduct of stockbrokers changing jobs and curtailing the related litigation. The departure of these major firms may foreshadow the departure of other Protocol firms and the unraveling of the Protocol generally.
In E.T. Products, LLC v. D.E. Miller Holdings, Inc., the Seventh Circuit Court of Appeals recently held that noncompete agreements signed by sellers of a business were enforceable under Indiana law, but the sellers did not violate the agreements. In doing so, the court provided valuable considerations for drafting valid noncompete agreements in the context of a sale of business.
For nearly a decade, Massachusetts legislators have considered various bills aimed at regulating the use of noncompetition agreements in the commonwealth. Noncompetes currently are governed by Massachusetts case law which, although relatively well developed, sometimes leads to inconsistent results, in turn leading to uncertainty as to what restrictions will be enforced.
On November 9, 2017, the New Jersey Senate introduced Senate Bill 3518, which would drastically limit an employer’s ability to enter into, and subsequently enforce, restrictive covenants (or “non-compete” agreements) with employees. The bill would also impose certain notice and monetary obligations on employers that seek to enforce restrictive covenants against their former employees.
“Knowledge is power” goes the old adage. Well, that is certainly true in the world of business where secret processes, confidential designs, and even a good customer list can give a business a vital commercial edge over its rivals. Protecting the sanctity of that information on the departure of a key employee is vital.
Restaurant fortunes are often attributable to just one or two signature dishes, and recipe ownership dilemmas can arise in restaurants of all sizes. Recent examples include a joint venture gone awry, resulting in a war over the ownership of a salted caramel brownie recipe; the “Taco Bible” that a former employee allegedly stole and used at another taco restaurant nearby; and a well-known Australian chef demanding that his former employer cease serving the signature dish he created when he worked there.
Last month, a Rhode Island trial court held that a hairdresser’s noncompetition agreement with the salon for which she had been working, which sold its assets to a successor salon, was not transferable to the successor business because the noncompetition agreement lacked an assignability clause.