The Hazards of Remote Employee Layoffs: Wage and Hour Issues, Severance Agreements, and Unemployment Claims

Remote work has exploded since the COVID-19 pandemic began, with some employers hiring employees to work remotely anywhere in the United States. With the recent economic downturn, layoffs are beginning to occur, and for the first time a significant number of remote employees may be included in layoffs. Layoffs of remote employees present unique legal hazards for employers.

A Lesson from the Fifth Circuit About Louisiana Noncompete Agreements: Establish the Employment Relationship First

A recent opinion from the United States Court of Appeals for the Fifth Circuit applying Louisiana’s restrictive law governing noncompetition agreements, reminds employers of the importance of establishing an employee-employer relationship before entering into noncompetition agreement.

Minnesota Legislative Update: Employment-Related Bills to Watch

The Minnesota Legislature, currently in regular session until mid- to late May 2022, has drafted various bills that may impact Minnesota employers and employees. Notably, some of the major bills under consideration (or already enacted) include a hair antidiscrimination bill, a measure extending the COVID-19 presumption of workers’ compensation eligibility for certain healthcare workers, and a proposal to restrict noncompete agreements.

California Nonsolicitation Clause Held Enforceable Under Narrow Exception for Sale of a Business

California law generally prohibits the enforcement of nonsolicitation agreements, but the law includes a narrow exception associated with the sale of a business. In Blue Mountain Enterprises, LLC v. Owen, a recent decision from the Court of Appeal of the State of California, First Appellate District, the appellate court upheld a ruling in favor of the buyer of a business under this exception.

Louisiana Appellate Court Reminds Employers of the Strict Rules for Enforceable Noncompete Agreements

Under Louisiana law, noncompetition agreements may limit competition only as to business similar to that of the former employer. The provision in Advanced Medical Rehab, L.L.C. v. Manton, the court found, violated La. R.S. 23:921 as it prohibited Manton from employment in the practice of marketing for any business, not merely marketing medical services for medical clinics.

D.C.’s Ban on Noncompete Agreements Is Set for Another Postponement

For employers wary of the looming implementation of the District of Columbia’s Ban on Non-Compete Agreements Amendment Act of 2020, it appears that the waiting game will continue until at least October 1, 2022. Although March 16, 2021, was the act’s “effective date,” the act’s near-total ban on noncompete agreements will not have true legal effect until the legislation’s “applicability date,” which the Council of the District of Columbia is delaying once again.

Wyoming Supreme Court Eliminates the Blue Pencil Rule for Noncompete Agreements

On February 25, 2022, the Wyoming Supreme Court issued a decision prohibiting courts from revising, or “blue penciling,” noncompete agreements to be reasonable and enforceable under the law. The decision overrules the Wyoming Supreme Court’s prior holdings on the issue and changes the landscape for employers drafting and enforcing Wyoming noncompete agreements.

Colorado Cracks Down on Restrictive Covenant Agreements, Authorizing Potential Criminal Penalties

Colorado has enlisted the help of the criminal justice system to reinforce its strong public policy against restrictive covenants. Beginning on March 1, 2022, violations of Colorado’s restrictive covenants statute, C.R.S. § 8-2-113, may subject employers to criminal liability.

FTC Signals Interest in Noncompete Clauses

On July 9, 2021, President Biden issued an executive order aimed at promoting competition in the economy, including directing the Federal Trade Commission (FTC) to consider exercising its rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

Georgia Courts Cannot Toll Duration of Noncompete Agreement, Even Against Willful Violator

Since the passage of the Georgia Restrictive Covenants Act (O.C.G.A. § 13-8-50 et seq.) in May 2011, there has been some level of uncertainty regarding the extent to which a court may “blue pencil” or modify an otherwise unenforceable covenant, including whether a court may extend the restrictions period of a post-May 2011 noncompete agreement.

Governor Pritzker Signs Illinois Noncompete Legislation Into Law

On August 13, 2021, Illinois Governor JB Pritzker signed into law Senate Bill (SB) 672, an amendment to the Illinois Freedom to Work Act. While the law codifies substantive Illinois common law on restrictive covenants, it also sets forth new and important limitations and requirements regarding the use of noncompete and nonsolicitation agreements.

President Biden Directs the FTC to Curtail the Use of Non-Compete Clauses: Are Changes on the Way?

On July 9, 2021, President Biden signed a sweeping executive order aimed at promoting competition in the economy. The order includes 72 initiatives that President Biden says will address pressing competition problems and promote long-term growth across the economy. Among the initiatives is a direction to the Federal Trade Commission (FTC) chair to “consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority … to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

Illinois Legislature Passes Comprehensive Non-Compete and Non-Solicitation Bill Anticipated to Be Signed by Governor Pritzker

The Illinois General Assembly recently approved House of Representatives Amendment 1 to Senate Bill (SB) 672, which would significantly reform noncompete and nonsolicitation law in Illinois. The bill will now go to Governor JB Pritzker, who is expected to sign the bill into law.

Pennsylvania Supreme Court Invalidates No-Hire Provision in Service Contract

The Supreme Court of Pennsylvania recently held unenforceable a no-hire provision in a service contract between a logistics company and a trucking firm. In Pittsburgh Logistics Systems, Inc. v. Beemac Trucking LLC, et. al., the court reasoned that the no-hire provision at issue was overly broad and undermined fair competition for employees in the shipping and logistics industry.

Massachusetts SJC Rules That Employers May Hold Employees Liable for Violating Unfair and Deceptive Trade Practices Law

On April 9, 2021, the Massachusetts Supreme Judicial Court (SJC) ruled that an employee may be liable to his or her employer under the Commonwealth’s unfair and deceptive trade practices statute—which authorizes an award of double or treble damages for willful violations, as well as costs and attorneys’ fees—for actions that the employee engaged in during the course of his or her employment.

DC’s Noncompete Ban—A Law of Unintended Consequences

Just as the calendar was turning to 2021, the Council of the District of Columbia threw District of Columbia employers a late-breaking curveball that most did not see coming. The Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Act 23-563) was passed by the Council on December 15, 2020, and signed by Mayor Muriel Bowser on January 11, 2021. The legislation, which will create a near-total ban on noncompete agreements, took the Washington, D.C., business community by surprise. The final text is substantially broader than the more modest bill that was proposed originally, and the legislation goes well beyond laws enacted in other jurisdictions to curtail the use of post-employment noncompete agreements.

Illinois Renews Effort to Enact Expansive Restrictive Covenant Legislation

In 2016, Illinois enacted the Illinois Freedom to Work Act (IFWA). In doing so, it became one of the first states to pass legislation in response to the Obama administration’s Call to Action, which asked states to amend their restrictive covenant laws to, among other things, ban covenants not to compete for workers under a certain wage threshold.

5 Key Employee Handbook Updates to Consider in 2021

With the onslaught of the pandemic in 2020, many employers were busy dealing with staffing issues, safety concerns, and COVID-19–related legislation. There may have been little to no time to address handbook policies. With many changes on the horizon in 2021 under President Biden’s administration and the adaptations in the working environment due to COVID-19, it may be a good time for employers to turn to the company handbook to ensure it is up to date. This article will highlight five areas to which employers may want to give special attention in 2021.

D.C. Council’s ‘Ban on Non-Compete Agreements Amendment Act of 2019’—Not Dead Yet?

Despite its well-deserved reputation as an employee-friendly jurisdiction, the District of Columbia is absent from the list of “blue states” that have adopted legislation limiting the use of noncompete agreements. Over the last few years, states such as Illinois, Maryland, Massachusetts, New Hampshire, Oregon, Rhode Island, Virginia, and Washington have enacted such laws.

Pennsylvania Supreme Court Addresses Consideration for Noncompetes

In Pennsylvania, noncompetition agreements must, among other things, be supported by adequate consideration to be enforceable. It is well established that an initial offer of employment constitutes adequate consideration. It is also well established that a noncompetition agreement presented to an employee after the start of employment must be supported by additional consideration, beyond the mere continuation of the employment relationship. But what about the regularly arising occurrence in which an agreement is orally agreed in connection with an initial offer, but isn’t signed until after the first day of work?