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.
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.
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.
Non-compete agreements are an essential instrument in many employers’ toolkits. But what happens to these agreements when an employee is laid off or let go due to economic downturn? In a small subset of states, such conditions could render non-compete agreements unenforceable.