Employment and Privacy Issues in Non-Competition Agreements


The ease with which employees move between jurisdictions in today’s global economy, combined with the ease with which electronic data can be copied and moved, make it essential for employers and employees alike to understand whether non-competition agreements[1] will be enforced in jurisdictions around the world. To illustrate, our firm recently filed a non-competition lawsuit against several former employees of our client, a fenetics research company headquartered in Iceland[2]. The individuals were citizens of Scotland, Slovenia, the United States and Iceland who relocated to Iceland to work for our client. When they left Iceland to

establish an allegedly competitive enterprise in the United States, our client's lawsuit seeking enforcement of

its non-competition agreements raised a myriad of multi-jurisdictional considerations. Data security, both of personal information and of confidential business information, is crucial for all organizations. However, some organizations, while focusing on the technological aspects of data protection, often neglect the most critical components of any data security program: their employees. Investments in technological protections such as firewalls, encryption and passwords, and other technology-dependent

security measures can be completely undermined by a single employee, especially a disgruntled, departing employee. Preventing such an employee from joining a competitor is therefore a key element in a company's corporate security program. Unfortunately, there is much variation within the United States and internationally with respect to enforceability of non-competition agreements. In the US, different states adopt different stances on whether noncompetition agreements may be enforced. Much variation also exists across the European Union (EU). This article highlights the different legal approaches found in the United States and the EU, and suggest methods of addressing the challenges of enforcing NC agreements across borders.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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