Can an employer enforce a noncompete against a former employee terminated during a reduction-in-force? Employer concerns of unfair competition are reemerging now that recently terminated employees are finding employment (some with competitors) in an improving economy.
When it comes to physician employment agreements, non-compete provisions can be controversial and tricky. The use of these agreements is nonetheless increasing and evolving as hospitals and other groups try to protect their investments in successful medical practices, especially those that they helped launch and nurture. After assuming the risks and costs of building a medical practice, they obviously do not want to see employed doctors move their practices (and patients) to a competitor.
Following the White House’s Call to Action and responding to some high-profile cases, Maryland became the latest state to ban noncompetition agreements with low-wage workers.
As of January 1, 2020, Oregon employers with noncompetition agreements will be required to clear another administrative hurdle to ensure their noncompetition agreements remain enforceable. The new law requires, as a condition to enforcing a noncompetition agreement, that the employer provide the terminated employee with a signed, written copy of the noncompetition agreement within 30 days after their termination.
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 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.