Restrictive Covenants

News & Analysis as of

HK's Bill Ross Gives Update From The State Bar Business Law Section's Corporations Committee -- SEC Continues Actions Against...

In separate actions on August 10, 2016 and August 16, 2016, the Securities and Exchange Commission (“Commission”) has again brought enforcement actions against companies for having confidentiality provisions in their...more

The High Price Of Trying To Enforce The Unenforceable

Readers of this blog will know that California marches to its own drummer when it comes to the enforceability of covenants not to compete. California Business & Professions Code Section 16600 declares these covenants void...more

4.5 Million Reasons to Abide by a Non-Solicitation Agreement

On September 9, 2016, the Pennsylvania Superior Court upheld an award of $4.5 million in punitive damages against several former employees, who violated non-compete/non-solicitation agreements with their former employers. In...more

Recent Decisions Highlight Courts’ Reluctance to Modify Overbroad Non-Compete Provisions

In what may be a trend, several courts around the country this year have embraced strict interpretations of non-compete agreements, refusing to blue pencil or equitably reform overbroad or unreasonable clauses in non-compete...more

Assignments and restrictive covenants in Ontario: franchisors take note

Franchisors concerned about how they may wish to handle an assignment of a franchise can look to two 2015 decisions of the Ontario Court of Appeal for guidance. In the first decision, 2147191 Ontario Inc. v. Springdale Pizza...more

Alabama’s Restrictive Covenants Statute: New Insight on Retroactivity, Employee Training, and the Blue Pencil Rule

Alabama’s new restrictive covenant statute became effective on January 1, 2016. Recently published committee comments clarified certain provisions of the law. The following briefly summarizes the final committee comments...more

Government Attacks on Non-Compete Agreements Continue

Non-compete agreements have long been used by employers as an effective tool to protect their valuable trade secrets and confidential information. However, employers’ overuse of non-compete agreements and employers’ practice...more

Breaches Of Covenants Not To Compete As Unfair And Deceptive Practices? The North Carolina Business Court Weighs In

When does a breach of a covenant not to compete violate N.C. Gen. Stat. § 75-1.1? Is tortious interference a per se violation of section 75-1.1? Departing-employee cases often raise both questions, but the answer to each...more

A Rose by Any Other Name is Not as Sweet: When a Non-Solicit is Actually a Non-Compete

The Ontario Court of Appeal has held that the words “accept business”, in what the employer intended to be a non-solicitation clause, served to restrict competition and is therefore not merely a non-solicitation...more

New Illinois Law Restricts Use of Employee Non-Compete Agreements

Governor Bruce Rauner has signed into law the Illinois Freedom to Work Act, prohibiting private sector employers from requiring their “low-wage employees” to sign non-compete agreements. The Act takes effect on January 1,...more

Illinois Limits Non-Compete Agreements Yet Again

On August 19, 2016, Governor Bruce Rauner officially signed into law the Illinois Freedom to Work Act (the “Act”), with an effective date of January 1, 2017. The Act, while short and to the point, will have a significant...more

Court Upholds Enforceability of “Clickwrap” Employee Agreement

As we have previously discussed, if you want your electronic contracts to be enforceable, it is a best practice to require the counterparty to affirmatively accept the contract by checking a box or clicking a button. A recent...more

The New York Attorney General’s Crackdown on Non-Compete Agreements: What It Means for Companies

Background - Recently, the NYAG has turned quite a few heads by entering into a new legal arena: challenging non-compete agreements between companies and their employees. The NYAG settled two investigations brought...more

Illinois Prohibits Non-Compete Agreements with Low-Wage Employees

Effective January 1, 2017, the Illinois Freedom to Work Act (the “Act”) will prohibit private sector employers from entering into non-competition agreements with employees earning a “low wage.” The Act defines low-wage...more

FRANCHISOR 101: Non-Competes for Franchisees’ Employees

A "non-compete" provision limits the franchisee's ability, after the franchise agreement ends, to continue to work in a similar type of business to the franchise within a certain time period and geographic area. The purpose...more

Poachers Beware: Wisconsin Court Rules That Restrictions on Employee Solicitation Are Subject to Law Governing Noncompetes

In a case of first impression, the Wisconsin Court of Appeals held that anti-poaching provisions in post-employment restrictive covenants are subject to the statutory regulations that govern noncompete agreements in...more

RIGHT IN THE BREADBASKET: Lessons From Early Cases at the Intersection of Noncompetes and the DTSA

As many TSW readers are aware, 2016 has been a big year for trade secret law, with both the United States and the European Union expanding trade secrets protections and increasing the uniformity of their laws. But as good as...more

North Carolina Court Again Narrows Scope of Post-Employment Restrictions

Last week’s EmployNews reported a Fourth Circuit Court of Appeals decision applying North Carolina law that invalidated an employment non-competition clause due to what it viewed as the overreaching scope of the restrictions....more

Agreement Prohibiting Solicitation of Employees by Former Employee may be Unenforceable

A recent decision from the Wisconsin Court of Appeals has raised serious questions regarding non-solicitation agreements that are often included as part of an employment agreement or severance agreement. A non-solicitation...more

Wisconsin Court Strikes Clause Restricting Solicitation of Employees

An engineer’s employment contract provision imposing a post-termination restriction against soliciting former co-workers to quit or to accept employment with a competitor, supplier, or customer is an unenforceable restraint...more

Restrictive Covenants in Michigan: A Cent, a Peppercorn, or Continued At-Will Employment

A business dispute in Michigan may provide insight into the consideration required to support a noncompete contract restricting future employment. Innovation Ventures, LLC v. Liquid Manufacturing, LLC, No. 150591, Michigan...more

Two New England States Pass Legislation Restricting Physician Non-Competes

We’ve written a lot this summer about the Massachusetts legislature’s latest failed attempt at non-compete reform. Two other states in New England, however, are able to claim accomplishments in that regard. Specifically,...more

NY Attorney General Schneiderman Declares “War” on Non-Compete Agreements That He Perceives as Overbroad

In an initiative that is virtually without precedent in New York, in the past two months (June 15, June 22 and August 4) Attorney General Schneiderman announced agreements with three separate companies in three different...more

Wisconsin Court Finds Anti-Poaching Agreements to be Unenforceable

Analyzing an anti-poaching agreement as a non-compete agreement, a Wisconsin Court of Appeals has confirmed that a former employee’s agreement not to solicit other employees may be void and unenforceable if it is too broad....more

Fourth Circuit Decision Reminds Employers That Overbroad Noncompete Agreements May Not Be Enforceable

If your company operates in a territory covered by the 4th circuit (Maryland, Virginia, West Virginia, North Carolina, and South Carolina) and requires employees to sign a noncompete agreement with language similar to the...more

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