A putative class action recently filed in Seattle, Washington, against a solar energy equipment company could be the first lawsuit to test the bounds of the state’s relatively new restrictions on noncompetition agreements for lower-wage employees.
The National Labor Relations Board General Counsel (GC) issued a memorandum on May 30, 2023, declaring her opinion that the “proffer, maintenance, and enforcement’ of noncompete agreements in employment contracts and severance agreements violate the National Labor Relations Act (NLRA) “except in limited circumstances.”
On May 24, 2023, Minnesota Governor Tim Walz signed into law a sweeping omnibus jobs and economic development and labor funding bill that will invest $500 million in a fund to match federal investments in infrastructure and large-scale development projects. This bill also fundamentally changes several areas of Minnesota employment law, including instituting a ban on employer-employee noncompete agreements signed after July 1, 2023, establishing new paid sick leave entitlements, providing employees with additional pregnancy and nursing accommodations, and adding new worker safety protections.
Minnesota is set to ban noncompete provisions in employment contracts as part of a new omnibus bill headed to Governor Tim Walz’s desk. The bill will have a significant impact on Minnesota employers by banning true employment noncompete provisions entered into on or after July 1, 2023, but this bill would not apply retroactively to existing noncompete provisions and also would not apply to other common types of provisions used by Minnesota employers to protect trade secrets, to protect confidential information, and to protect against soliciting customers or employees.
On 10 May 2023, the United Kingdom’s Department for Business and Trade published its policy paper, “Smarter Regulation to Grow the Economy.” The proposals contained therein are intended to “improve regulation across the board to reduce burdens, push down the cost of living, and drive economic growth.”
A recent ruling from a Louisiana appellate court is a reminder that a noncompete agreement that fails to specify the parishes or municipalities a former employer wishes to protect is unenforceable.
Violating the Sherman Antitrust Act can result in criminal charges, not just civil liability. A criminal prosecution brought by the U.S. Department of Justice last fall is illustrative. The case also reflects a renewed, bipartisan effort at the federal level to crack down on non-compete agreements.
Canadian employers in federally regulated industries (which include industries such as telecommunications, air/rail travel, and banking, among others) may want to note a number of recent and upcoming changes that will impact their workplaces.
The launch of ChatGPT on November 30, 2022, ushered in an explosion of interest by businesses seeking to incorporate large language model artificial intelligence applications into the workplace. To capitalize on efficiencies that this technology presents, many employers have implemented or are considering the use of chatbots to serve human resource functions.
In February 2023, new legislation was proposed in the California State Assembly that, if adopted and signed into law by Governor Gavin Newsom, could have a significant impact on employers and their attorneys providing advice regarding the use of restrictive covenants in California.
Connecticut, Indiana, New York, Rhode Island, and Utah are among the latest states to propose further limitations on the use of post-employment restrictive covenants. Connecticut’s House Bill (HB) 6594 and New York’s Senate Bill (S) 3100 would prohibit the use of noncompetes with a wide swath of employees and independent contractors. Indiana’s Senate Bill (SB) 7, Rhode Island’s House Bill (H) 5284, and Utah’s Senate Bill (SB) 170 are more narrow and would only prohibit the use of noncompetes for certain medical professionals.
The U.S. Congress has joined a growing number of state legislatures and the Federal Trade Commission in seeking to curtail—or altogether end—the use of noncompetition agreements in the employment context. The newly introduced Workforce Mobility Act of 2023 would, for the most part, ban employers’ use of noncompete agreements.
On February 7, 2023, the Indiana Senate passed a bill to outright ban noncompete agreements between doctors and their healthcare provider employers, though with an amendment to remove restrictions on referral incentives.
Minnesota’s 2023 legislative session is off to a hot start and turning out to be an important one for Minnesota employers and companies doing business in Minnesota. Currently, there are four noteworthy bills that employers should keep an eye on as they progress through the Minnesota Legislature.
Connecticut employers have seen a significant increase in legislation affecting their businesses over the last few years. The Connecticut General Assembly does not show any signs of slowing down. A slew of labor and employment bills have been proposed in the 2023 legislative session.
The Colorado Department of Labor and Employment (CDLE) recently released the 2023 Publication and Yearly Calculation of Adjusted Labor Compensation Order (2023 PAY CALC Order). The 2023 PAY CALC Order has increased the compensation thresholds applicable to a variety of Colorado wage-and-hour and workplace requirements.
For many employers, a new year is a new opportunity to update policies, procedures, and agreements—including restrictive covenants. In addition to ensuring compliance with applicable state requirements as to timing, consideration, and restrictions, companies need to be aware of applicable compensation minimums for employees being asked to sign noncompetition and nonsolicitation agreements. With the start of the new year, many states have increased minimum compensation floors for such employees.
On January 5, 2023, nearly eighteen months after President Biden signed an executive order directing 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,” the FTC has issued a far-reaching notice of proposed rulemaking that would prohibit the use of non-compete clauses and preempt all state laws providing lesser protection than the proposed rule.
In Louisiana, restrictive covenants—known locally as “no competes”—are unenforceable by statutory default. One exception, based on the employer-employee relationship, authorizes an employer to enforce an agreement preventing a former employee from working for a competing business or soliciting customers after the employee leaves employment with the first employer.
Employers in Finland have a deadline of December 31, 2022, to double-check their pre-2022 employment contracts for noncompetition clauses and to waive them before the end of the transition year, if necessary.
Over the last several years, business-to-business “no-hire” and “no-poach” agreements have come under legal attack, including through enforcement actions by the Federal Trade Commission and criminal prosecutions by the U.S. Department of Justice. Even President Biden jumped into the fray on July 9, 2021, when he issued his “Executive Order on Promoting Competition in the American Economy.”
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.
