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Non-Compete and Trade Secrets Blog

Posts in Restrictive Covenants.

The recent California Court of Appeal ruling in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., creates some doubt about the continued viability of employee non-solicitation covenants. However, this case is distinguishable and appears limited to its facts, where the particular employee's profession was the business of recruiting temporary travel nurses and accordingly the court court found that the non-recruiting restriction was an unlawful restraint of trade or profession.

A federal appeals court recently ruled that an overbroad “no-rehire” provision in a settlement agreement with a former employee can be an unlawful restraint of trade under California law.

It has now been over two years since the Defend Trade Secrets Act went into effect. How have courts been applying the controversial civil seizure remedy?

It finally happened. After years of debate on Beacon Hill, Massachusetts law makers agreed to reform the Commonwealth’s treatment of noncompetition agreements. Among other things, the bill precludes enforcement of noncompetition agreements against non-exempt employees, limits their length to just 12 months, and precludes the use of “continued employment” as acceptable consideration. If signed by the Governor, the bill will apply to agreements entered into on or after October 1, 2018.

In the final installment of our three-part series, we highlight restrictive covenant reform legislation that is currently pending before the state legislatures.

Since October 2016 and the Call to Action by the White House, eight (8) states have enacted some type of restrictive covenant reform. This post discusses those efforts and provides an analysis of each new state law that we have seen.

State legislatures across the country have been active in recent years proposing and enacting legislation that impacts employers’ use of restrictive covenants. In a series of three posts, we will examine how this movement started, where it has gone, and where it is going.

Nondisclosure agreements are not enough to fully protect the value of a company’s proprietary information. The $30 million dollar jury verdict in BladeRoom v. Facebook, et al. is not inconsequential, to be sure, but it represents only ten percent of the recovery that BladeRoom was seeking against Facebook and Emerson Electric.

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. 

Employers must fight the urge to utilize overbroad non-compete clauses with their high level employees. The Northern District of Illinois reminds employers of the consequences that can result from the use of such overbroad covenants.

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