Washington State Legislature Adopts Law Restricting Noncompetition Agreements

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.

Gig Economy Temporary Staffing With Smartphone Apps: 7 Legal and Practical Considerations for Employers

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.

Massachusetts Passes Noncompete Reform Legislation

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.     

Careful Drafting Required: Restrictions on Employee Solicitation Subject to Wisconsin Non-Compete Law

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.

The Protocol for Broker Recruiting Suffers Major Defections—and May Suffer More

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.

Seventh Circuit Finds Five-Year Sale-of-Business Noncompete Agreement Valid

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.

Massachusetts Once Again Is Considering Enacting Comprehensive Noncompete Legislation

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.

New Jersey Bill Seeks to Significantly Restrict the Use and Enforceability of Non-Compete Agreements

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.

The Not-So-Secret Recipe: How Restaurants Can Protect Their Trade Secrets

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.

Rhode Island Court Gives Assignability of Employee Non-Competes a Haircut

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.

Wage Violations Are Now “Public Record” Under Colorado’s New Wage Theft Transparency Act

On April 13, 2017, Governor Hickenlooper signed the Wage Theft Transparency Act into law, which is effective immediately. The Act makes “wage theft” violations in Colorado, including nonpayment of wages or overtime compensation, public record and subject to records requests under the Colorado Open Records Act.

Watch Your Language: Texas Court Highlights the Importance of Language in Noncompetes

Texas law permits businesses to utilize noncompetition agreements to protect their legitimate business interests in certain circumstances. Companies, attorneys, and the courts generally focus on the consideration that must be exchanged in order for the parties to create a legal, enforceable noncompetition agreement. However, since courts analyze noncompetition agreements under standard contract interpretation principles, the language beyond the exchange of consideration can also be critical to the enforceability of a noncompetition agreement. A recent case from the Court of Appeals of Texas in Texarkana highlights this importance.

New York Attorney General Answers White House’s Call: Promises Bill to Curb Non-Compete Use

On the same day that the White House released its “State Call to Action on Non-Compete Agreements,” encouraging states to adopt best practice policies in the enforcement of non-compete agreements, New York State’s Attorney General announced that he plans to introduce legislation in 2017 to curb the use of these agreements.

What the DOJ/FTC’s Recent “Antitrust Guidance for Human Resource Professionals” Means for Employers

On October 20, 2016, the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) jointly issued a publication entitled “Antitrust Guidance for Human Resource Professionals” which, according to the opening paragraphs, is “intended to alert human resource (HR) professionals and others involved in hiring and compensation decisions to potential violations of the antitrust laws.”

The New Antitrust Guidance: DOJ and FTC Offers Direction to HR Professionals

On October 20, 2016, the Department of Justice (DOJ) Antitrust Division and Federal Trade Commission issued a guidance aimed at alerting human resources professionals on potential violations of the antitrust laws. According to a DOJ statement, the guidance is intended to “help educate and inform” HR professionals and other professionals who are involved in making hiring and compensation decisions “about how the antitrust laws apply to the employment arena.” However, when reading the guidance you would not be wrong to feel as though the document is more threatening than informative.

A Call-to-Action: Obama Administration Encourages States to Ban Noncompetes for Low-Wage Workers and Certain Other Employees

On October 25, 2016, the Obama administration released a fact sheet announcing the steps that the White House is taking to “enhance competition to benefit consumers, workers, and entrepreneurs.” The administration’s actions come in response to President Obama’s April 15 executive order: Steps to Increase Competition and Better Inform Consumers and Workers to Support Continued Growth of the American Economy.

Low-Wage Employees in Illinois Protected From Noncompetes Under New Law

On August 19, 2016, Illinois Governor Bruce Rauner signed a bill prohibiting noncompete agreements for low-wage employees. In addition to prohibiting most private-sector employers from entering into noncompetes with their low-wage employees, the Illinois Freedom to Work Act (the Act) renders “illegal and void” any “covenant not to compete entered into between an employer and a low-wage employee” after the effective date of January 1, 2017.