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Non-Compete and Trade Secrets Blog

The recruitment and onboarding process can be fast-paced as employers and recruits go back and forth on salary, title, benefits, and more. Sometimes an impending deadline pushes the parties to move quickly, such as the start date for a big project for which the new recruit will be a key part of the team. In their anxiousness to just get started after an important recruit agrees to join the company, business leaders may be tempted to let the new hire start work while the parties “work out the details” of an employment agreement – potentially including the exact terms of restrictive covenants such as non-compete and non-solicit provisions. However, the seemingly reasonable decision to give an employee time to review a proposed agreement, and perhaps discuss it with personal counsel before signing, could leave you with an unenforceable agreement according to a recent decision by the Pennsylvania Supreme Court. The recent decision in Rullex Co., LLC v. Tel-Stream, Inc., emphasized that, in order for a restrictive covenant to be enforceable based on a job offer (and without any additional consideration), the parties must have agreed on the covenant’s provisions at the time employment commences.

The recently proposed federal Employee Mobility Act of 2018 would effectively create a nationwide ban on non-compete agreements. Introduced in both the Senate and the House of Representatives, Senate Bill 2782/House Bill 5631 is the next step in a multi-year effort by a group of Senators and Representatives, and previously White House personnel under President Obama, who argue that employee non-competes (a) unduly inhibit employees’ economic opportunities, and (b) harm the economy by limiting employee mobility. This proposal comes as multiple state legislatures likewise have been considering and, in some cases, enacting legislation relating to employee restrictive covenants. 

This week, the U.S. Supreme Court issued a ruling in a non-compete case -- a type of dispute that rarely finds its way to the high court. The Supreme Court reaffirmed what most employers have believed for quite some time: if you include an arbitration clause in your employment agreement, you can count on being able to enforce the agreement to arbitrate.

Managing non-compete and trade secret issues on a multi-national basis isn’t just a problem for Fortune 500 companies. Tune in for our series of blog posts on the emerging challenge of managing non-compete and trade secrets issues when operating in a multi-national environment.

A recent Formal Opinion issued by the ABA Standing Committee on Ethics and Professional Responsibility offers yet another reason for non-compete lawyers to be sure they remind clients about the dangers of communicating with counsel via workplace computers.

When employees jump ship, a company still may have legal options, even when the employees didn't sign non-competes.

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