Restrictive Covenants

News & Analysis as of

Ten Questions To Ask Your Client Before Seeking To Enforce A Restrictive Covenant Or Confidentiality Agreement

The phone rings on a Wednesday afternoon. In a panic, your longtime client explains that a hotshot employee has unexpectedly fled to a competitor a few months before the launch of a top secret new product. The client is...more

Go Head Over Heels To Protect Trade Secrets (And Other Gymnastics Related Puns)

Face it. No matter what industry you are in and no matter how big your company, there will come a day when one of your most valuable employees doesn't work there anymore. When that happens, it's natural to feel disappointed...more

Nigeria: Part II

This article is the second in a series which provides an overview of the basics of employment law in Nigeria and will focus on laws governing employment terminations, including wage and hour, termination, restrictive...more

SEC Proposes Rules on Clawback Policies & Other Dodd-Frank Act Executive Compensation Updates - July 2015

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank” or the “Act”) includes a number of measures focused on governance and disclosure practices related to executive compensation. Although...more

Can a Move to California Invalidate a Non-Compete?

It turns out the answer to this question depends on the reason for the move and whether California law applies to the contract. We all know that California is finicky when it comes to non-competes – so much so that...more

Real World: An Update from Dechert's London Finance and Real Estate Group - July 2015: Enforcement of Restrictive Covenants Under...

Under a building scheme, where restrictive covenants are imposed on the original plot owners within a development for the mutual benefit of the plots, subsequent owners may enforce those covenants against each other. In...more

Federal Court Split on Consideration Needed to Enforce a Restrictive Covenant in Illinois Remains Unresolved

On July 14, 2015, the U.S. Court of Appeals for the Seventh Circuit decided Instant Technology, LLC v. DeFazio. The decision was widely expected to address the current split in the Northern District of Illinois on whether two...more

Post-Employment Covenants: Is an Inducement to Smile An Inducement to Cancel?

A recent Circuit Court case confirms that the term “non-inducement” means just that. In American Family Mutual Insurance Company v. Graham, the Eighth Circuit affirmed a jury verdict against an insurance agent who, the jury...more

Cracks in the Fifield Armor?: New Dissent Marks First Big Challenge to Illinois' Bright-Line Restrictive Covenant Rule

When continued employment is the sole consideration for a post-employment restrictive covenant (such as a noncompetition agreement), the Illinois Supreme Court requires that an employee be continually employed for a...more

No Fault Employment?

The divorce metaphor bears fruit yet again when it comes to the employment relationship. To this mix I add the concept of “no fault” divorce and the reasons employment ends. A “no fault” divorce permits a spouse to end a...more

Be Global - June 2015

Whistleblowing: An employer's guide to global compliance - As the global push to combat corruption in government, politics, civil society and business gathers pace, whistleblowing continues to be a topic of ever...more

Hawaii Bans Non-Compete and Non-Solicit Agreements with Technology Workers

Hawaii joined the small list of states that prohibit certain non-compete agreements with employees. On June 26, 2015, Hawaii’s governor David Ige signed Act 158 which voids any “noncompete clause or a nonsolicit clause...more

Restrictive Covenants – A Close Call Goes The Employer’s Way

A very recent federal court decision, A.H. Harris & Sons, Inc. v. Naso, 2015 WL 1420132 (D.Conn.), illustrates how judges weigh various facts when deciding to grant or deny a preliminary injunction in a restrictive covenant...more

So You Have a 10-Page Single-Spaced Alabama Noncompete Agreement, Now What?

Employees in Alabama, like in many other places, often are required to sign employment agreements, most of which contain future restrictions on certain activities. The menu items for these agreements usually include covenants...more

New LLC Is Not Delivered By Sale Membership Interests

Readers of this blog should be well aware of California’s general antipathy to covenants not to compete. See links below. Other jurisdictions, however, are less averse. Assuming that a covenant not to compete is...more

Alabama’s New Non-Compete Statute: Are You Ready For New Year’s Day?

Those involved in drafting, negotiating, or litigating covenants-not-to-compete in Alabama have long known that Alabama’s statute books seldom provide ready answers on this particular topic. The text of current Alabama Code...more

There's A Difference Between "Confidential And Proprietary Information" And A Trade Secret

I can't remember the last time that the Business Court granted a motion opposing the designation of a case as a mandatory complex business case. And since the Business Court Modernization Act went into effect in October...more

Non-Competes & Disintermediation (Cutting Out the Middle Man) – A Recent Case from NJ

A recent case out of the District of New Jersey addresses disintermediation as a legitimate business interest in the non-compete context. Disintermediation is just a technical term for cutting out the middle-man. Let’s take...more

New York Rejects Florida Non-Competition Law As Against Public Policy

In a blow to New York employers who wish to enforce restrictive covenants under other state law, the New York Court of Appeals recently held that the Florida choice of law provision in an employment agreement was...more

Physician Estopped From Alleging FCA Violations in Contract He Previously Approved

Cooper v. Pottstown Hospital is another case where a dissatisfied party is attempting to use the federal Anti-Kickback Statute or the Stark Law in litigation arising out of the contracts to which they were willing parties at...more

Even More Reason for Manufacturers to Update Their Employment Agreements

In an increasingly competitive landscape, a manufacturer’s significant employees may hold the “keys to the kingdom.” Loss of such a worker to a competitor could have a substantial impact on future business growth. Many...more

Competing After Employment (Part 2)

A few weeks ago, Jawbone, a fitness tracking hardware and software maker, sued its arch-rival Fitbit, alleging that Fitbit lured its employees away to obtain access Jawbone’s confidential information and product plans. How...more

General Release May Not Preclude FLSA Claims Says Fifth Circuit

If I settle my employment lawsuit and release “all claims,” does that include wage-hour claims if the subject never came up? Last week, in Bodle, et al. v. TXL Mortgage Corporation, the Fifth Circuit said no....more

No-Hire Clauses Common to Settlement Agreements Now Void In California

The Ninth Circuit Court of Appeals recently broadened California's already expansive interest in promoting employee mobility by voiding any contract provision imposing a meaningful obstacle to a California resident's ability...more

Democratic Senators Propose Federal Legislation to Ban Use of Non-Compete Agreements with Low-Wage Employees and to Require...

U.S. Senators Al Franken (D-Minn.) and Chris Murphy (D-Conn.) proposed federal legislation last week to ban the use of non-competes for low-wage employees and require companies to provide advance notice before asking...more

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