Restrictive Covenants

News & Analysis as of

Do You Know What Your Restrictive Covenant Restricts?

When preparing employment agreements, businesses often want to include provisions that restrict employees in their use of company information, contact with customers, or choice of next employer. These restrictions, called...more

PilieroMazza Legal Advisor - Third Quarter 2014

In this issue: - Avoiding Pitfalls with Restrictive Covenants in Employment Contracts - What Is Enough Consideration of Small Business Interests? – GAO Denies Protests Against GSA Consolidation of Small...more

Dealing with Conflicting Restrictive Covenants

In a recent case, Oxford Common Elements Condo Corp. No 73 (“OCECC No. 73”) v Greenbury, the Ontario Superior Court of Justice reaffirmed the principle that in instances of overlapping restrictive covenants, the least...more

Back to the Basics: Non-Compete Lost to a Superseding-Agreement Clause

With so much focus on the reasonableness of restrictive covenants, it’s easy to forget that non-competes are plain old contracts—nothing more. And when it comes to enforcing non-competes, basic contract law still applies....more

The World Cup of Non-Competes

Can you imagine if FIFA allowed or enforced non-compete agreements that limited the ability of a player to hold dual citizenship and play for either country? Would the World Cup have suffered if brothers representing Ghana...more

Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH, C.A. No. 5589-VCP (Del. Ch. June 25, 2014) (Parsons, V.C.)

In this post-trial memorandum opinion, the Delaware Court of Chancery dismissed plaintiffs’ breach of contract claim with prejudice, finding that plaintiffs failed to establish they were parties to the License Agreement at...more

Tortious Interference in Virginia – Improper Methods Requirement

The U. S. District Court for the Eastern District of Virginia says a company that hired away a competitor’s employees may be liable for tortious interference. This can occur with an at-will business contract without the need...more

Employee Benefits Developments - June 2014

In This Issue: - Rulings, Opinions, Etc. ..Validating Rollover Contributions: New Guidance - Case ..Stock Drop Case Development: The Supreme Court Rejects The Presumption Of Prudence ..Dividend...more

Massachusetts Federal Court Refuses to Transform Non-Disclosure Agreement into a Non-Competition Agreement

A recent decision from the Massachusetts federal district court serves as a good reminder to Massachusetts employers that courts are unlikely to view the breach of a non-disclosure/confidentiality agreement as justification...more

UWOA Exception Does Not Apply to Noncompete Agreements in Pennsylvania

The Pennsylvania Superior Court recently reaffirmed Pennsylvania’s longstanding position that employers must provide valuable consideration to employees who enter into noncompete agreements. In a case of first impression, the...more

Pennsylvania Appellate Court Finds Uniform Written Obligations Act Inapplicable to Covenants Not to Compete

In a case of first impression, the Pennsylvania Superior Court (one of Pennsylvania’s two state appellate courts) recently issued a ruling in Socko v. Mid-Atlantic Systems of CPA, Inc. (“Socko”), 1223 MDA 2013 (May 13, 2014),...more

Employment Law - June 2014

California Supreme Court Strikes Down $15 Million Employee Class Action Win and Orders Decertification in Duran V. U.S. Bank Nat’l Ass’n - Why it matters: On May 29, 2014, the California Supreme Court unanimously...more

Damages for Breach of a 12-Month Non-Compete Covenant

In Merlin Financial Consultants Ltd v Cooper [2014] EWCH 1196, the High Court awarded damages to an employer where the employee had breached a 12-month non-compete covenant in a business (rather than employment) agreement. ...more

Restrictive Covenants and the Cross-Border Employer

In most U.S. states employers are free to bind employees with restrictive covenants – which commonly take the form of post-employment restrictions on soliciting clients or employees – as a condition of employment. The wide...more

Pa. Superior Court: ‘Valuable Consideration’ Required for Employer Enforcement of Non-Compete Agreement

In a case of first impression, a Pennsylvania appellate court recently held that contractual language satisfying the state’s Uniform Written Obligations Act (UWOA)—that is, a statement that the parties “intend to be legally...more

The Fact and Fiction of Non-Disclosure Agreements

Entrepreneurs looking for angel or venture funding, or a strategic partnership, rely on Non-Disclosure Agreements, or NDAs, to protect their trade secrets, shield employees from poaching by the other parties, and keep...more

Prepare To Consider Your Former Employees Your New Competition

There’s nothing that gets employers more fired up than a former employee jumping ship to join a competitor. But, in an effort to prevent such future angst, you’ve had your employees sign a non-compete. You’re golden, right?...more

A Case in Point: When and How to Use Non-Compete Agreements for Bank Executives and Key Managers

Consumer and commercial banks have interests that may legitimately be protected by a noncompete agreement. Such banks are in the business of using a sales force, direct mail, telemarketing, branches, the Internet and other...more

Pennsylvania Court Refuses to Enforce Non-Competition Agreement; Holds that Continued Employment Alone is Insufficient...

Most jurisdictions in the United States hold that continued employment constitutes sufficient consideration in exchange for entering into a non-competition agreement. A handful of jurisdictions however – Minnesota, North...more

Dispelling Employment Myths Series – Issue 2: Non-Compete Agreements

Ever play the game telephone? It’s a game in which one person whispers something into the ear of the next person, and that person is supposed to whisper the same thing into the ear of the next person, and so on. When the...more

Pa. Superior Court Reiterates That Employers Have to Provide Additional Consideration When Obtaining Noncompete Agreements with...

The Pennsylvania Superior Court recently ruled in Socko v. Mid-Atlantic Systems of CPA, Inc., that employers cannot enforce noncompete agreements entered into after the employee has already commenced employment, unless the...more

Pennsylvania Non-Compete Update

The Superior Court of Pennsylvania reaffirms that restrictive covenants added to existing employment relationships must be supported by “valuable consideration.” Pennsylvania courts have long held that an employer...more

Pennsylvania Superior Court Confirms that Valuable Consideration Required for Non-Compete Agreement Entered Into After...

Through its decision in Socko v. Mid-Atlantic Systems of CPA, Inc., No. 1223, 2014 WL 1898584 (Pa. Super. Ct. May 13, 2014), the Pennsylvania Superior Court has confirmed that a restrictive covenant entered into after the...more

Protecting Your Start-Up’s Core Assets

In my series of posts with advice for start-ups, I think this is the most important one. It is about protecting the heart of your business, i.e. those assets that form its foundation, drive its prospects and distinguish it...more

State Law No Defense to Miller Act Claims

Since I work with a number of construction contractors, I always get the question of whether the state law chosen to govern the contract has material impact on the contract and/or whether it could be determined which state...more

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