More than two years have passed since the start of the pandemic, and many workers continue to work from home in some capacity. In fact, companies are offering remote positions as a hiring incentive to increase their job candidate pools. Before agreeing to remote work arrangements with new hires or current employees, especially those who are hourly and nonexempt, companies may want to consider certain factors to ensure that the arrangements will be feasible.
After more than two years of delay and amendment, the District of Columbia’s Ban on Non-Compete Agreements Amendment Act of 2020, which was introduced in the pre-pandemic days of 2020, will finally take legal effect on October 1, 2022. Efforts to amend the 2020 act culminated in the Non-Compete Clarification Amendment Act of 2022 (D.C. Act 24-526), which Mayor Muriel Bowser signed into law on July 27, 2022.
With little press coverage, Illinois just amended the Nurse Agency Licensing Act (House Bill (HB) 4666) to prohibit noncompete agreements between nurse staffing agencies and nurses or certified nursing assistants (CNAs) and impose additional reporting requirements.
In a decision that may be useful to employers drafting severance and litigation settlement agreements in New Jersey, a panel of the New Jersey Appellate Division found that provisions requiring parties not to disparage one another may be included in settlement agreements in employment-related cases.
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 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.
Colorado has enacted the most significant change to its legal landscape concerning restrictive covenants in the employment context in the state’s history.
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 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.
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.
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.
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 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.
Changes to Oregon employment laws taking effect next year will be keeping human resources professionals very busy this holiday season and into the new year in the Pacific Northwest.
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.”
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.
On October 25, 2021, the Government of Ontario introduced Bill 27, the Working for Workers Act, 2021. According to Ontario’s Ministry of Labour, Training and Skills Development, Bill 27 would encourage employee work-life balance and promote competition within the province.
In May 2019, Washington State enacted restrictions on the enforceability of noncompetition covenants. The law, which took effect on January 1, 2020, requires the state to annually adjust the income thresholds for workers who are subject to noncompetition covenants.
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.
On May 25, 2021, Nevada Governor Steve Sisolak signed into law Assembly Bill (AB) 47, which amends Nevada’s noncompetition statute, NRS 613.195 and the Nevada Unfair Trade Practices Act. The changes will go into effect on October 1, 2021.
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.”
In Van Buren v. United States, No. 19-783 (June 3, 2021), the Supreme Court of the United States recently waded into the meaning of the Computer Fraud and Abuse Act’s (CFAA) “exceeds authorized access” prohibition.
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.
On May 21, 2021, Oregon Governor Kate Brown signed Senate Bill (SB) 169, making substantial changes to the statute that limits noncompetition agreements with Oregon employees, Oregon Revised Statutes (ORS) 653.295. The changes apply to any employee noncompetition agreement entered into on or after the effective date of the act.
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.
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.
The recent decided case of Duplessis Buick-GMC Truck, Inc. v. Chauncey offers Louisiana employers a powerful cause of action against highly trusted former employees for breach of fiduciary duty—one that is akin to an action to enforce noncompete agreements or trade secret laws but without statutory constraints.
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.
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.
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.