Category Archives: Noncompetes

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Are Your Diversity Initiatives Trade Secrets?

Last month, a tech giant (IBM) sued one of its former executives who went to work for another tech giant (Microsoft), alleging that she breached her non-compete agreement and misappropriated trade secrets. Given the parties involved, you probably assume that the trade secrets at issue were source codes or algorithms. In fact, they were IBM’s … Continue Reading

Non-Solicitation-of-Employee Agreements Are Not Non-Competes—Except When They Are

Employers commonly include prohibitions against post-employment soliciting of customers and employees in employment agreements. Most states simply treat prohibitions against soliciting customers like non-compete agreements—they are generally unenforceable unless narrowly tailored.[1]  Other states go beyond the non-compete analysis and apply additional factors to determine whether a customer non-solicit is enforceable.[2] When it comes to non-solicits … Continue Reading

New York Appellate Court Declines To Enforce Non-Compete Agreement Against Employees Terminated Without Cause

It should come as little surprise to employers that the New York courts take a skeptical view of non-compete agreements between employers and employees. Consistent with this view, a New York State appellate court recently confirmed what many, including prior authors of this blog, already understood: in New York, any employer who terminates an employee … Continue Reading

When Your Contractor Isn’t a Contractor and Your Non-compete Isn’t Enforceable

You hire an independent contractor and include a non-competition clause in the independent contractor agreement. You figure that, even if somehow a court later concludes this person is an employee, at least you still have the protection of the non-compete. So imagine your disappointment when you learn that your contractor actually was your employee and … Continue Reading

New York Employers’ Use of Non-Competes in Jeopardy?

New York Attorney General Eric Schneiderman has promised to introduce a bill that would restrict New York employers’ use of non-compete agreements for certain non-highly-compensated employees. The proposed legislation would (i) ban the use of non-competes for employees who earn less than $900 per week; (ii) require employers to pay additional monetary consideration in exchange … Continue Reading

Rethinking “Cause” May Enhance the Enforceability of Your Non-Compete

Although the arrival of the new Administration moots the Obama White House’s recent “State Call to Action on Non-Compete Agreements” addressing that administration’s concerns about non-compete agreements in the workplace, the fact remains that non-competes are governed by state law, and that some of the issues raised in the “State Call” will remain with us. … Continue Reading

Moving Toward a Federal-State Approach To Noncompete Regulation?

Non-compete agreements are currently exclusively regulated by a panoply of state laws. Coextensive with recent scrutiny over anti-competitive business practices relating to non-compete use, federal interest in non-compete regulation has heightened, culminating in a White House “Call to Action” urging certain state reforms. While there appears to be room for a limited level of federal … Continue Reading

California Further Restricts Employers from Trying to Enforce Non-Compete Agreements

Are you an employer based outside of California with employees who live or work in California? If so, you will want to take note of a new California Labor Code provision that becomes effective on January 1. Not surprisingly, companies headquartered outside of California generally have employment agreements that are purported to be governed by … Continue Reading

White House Call to Action to Limit Non-Competes

Earlier this year, the White House and Treasury issued reports criticizing the widespread use of non-compete agreements. They found that such agreements affect nearly one in five U.S. workers, or approximately 30 million people. Last week the White House expanded its efforts, issuing a Call to Action for states to reform and limit non-compete agreements, … Continue Reading

Netflix Responds – CA Law does not Permit Employment Contracts?

Just in late last week: Netflix counters the Fox lawsuit with a jab of its own – Netflix claims that the employment agreements that Fox utilizes and its practices concerning those term agreements run afoul of California law. Since neither former Fox employee was bound for more than 7 years under an employment agreement (and … Continue Reading

When “Pay to Not Play” Might Not Work, but “Less Is More” Might

Employers are constantly looking for ways to fortify non-competes against attacks on their enforceability. Narrowing the range of the prohibited activity (“you may not do for a competitor what you did for us”) generally solves the “janitor” problem (“Judge, under the express language of the company’s non-compete, my client, who was the Director of Whatever, … Continue Reading

If It Seems Like Florida’s Restrictive Covenant Statute Is Too Good to Be True…That’s Because It May Be

When it comes to the principle of freedom to enter into contracts, “freedom’s just another word” for “as long as you don’t bump up against a more important legal principle.” Indeed, the “freedom of contract is a qualified and not an absolute right.” Chicago, Burlington & Quincy R.R. Co. v. McGuire, 219 U.S. 549, 567 … Continue Reading

What Color is Maryland’s Pencil? Judicial Modification of Maryland Noncompetes

Consider the following sample non-compete provision in an employment agreement for a salesperson: Employee agrees not to work as a salesperson for any company that competes with Employer for a period of two years following Employee’s separation from employment in the following regions: Maryland, the District of Columbia, and Virginia. Geographically overbroad? Could be. Too … Continue Reading

If You Can’t Get a Non-Compete, Why Not Sell the List?

The proposition that a customer list can constitute a trade secret is well settled and unremarkable. But because California strongly protects the right to compete, a former employee can lawfully use a trade secret customer list to “announce” a new business affiliation. The question of whether an announcement is a solicitation, or a cover-up for … Continue Reading

Maximizing Your California Non-Compete’s Chance of Survival: California Federal Courts and Forum Selection Clauses

California’s state and federal courts are loath to enforce choice of law provisions allowing the law of an out-of-state employer’s home state to control the validity of a California employee’s non-compete. But California’s federal courts will uphold forum selection clauses stipulating that the home state must make the choice of law determination, dramatically increasing the … Continue Reading

Does a Termination Without Cause Mean Termination Without a Non-competition Agreement?

When At-Will Employment May Not Be the Employer’s Friend  Employers generally embrace the at-will employment doctrine. The right to terminate employees for any or no reason and with or without notice may sound appealing to you if you are an employer. In New York, however, there is an added wrinkle: When terminating an at-will employee without cause, … Continue Reading

Unsigned, Unsealed, Undelivered, but Undaunted: How to Enforce an Unsigned Noncompete

If you haven’t yet had this sinking feeling, the odds are someday you will. One of your top employees is leaving. To go to a competitor. With no notice. The employee is at-will. You figure: How can s/he do this? We made him/her sign a noncompete. To prepare for your call to your lawyer, you go to the file.  There … Continue Reading