The Federal Trade Commission made headlines earlier this month with its proposed rule banning non-competes. Other news announced by the FTC the prior day received less attention but has the potential to cause real headaches for employers – the settlement of three enforcement actions against companies for allegedly using non-competes in an unlawful manner.
These enforcement actions by the FTC are the first of their kind at the federal level and represent a significant expansion of the agency’s involvement in policing non-compete agreements.
While the proposed rule should be concerning to employers, it may never be adopted or could be invalidated by the U.S. Supreme Court. By contrast, the FTC’s enforcement actions on non-competes represent a new and non-theoretical compliance risk that employers must take into account immediately.
Remote work grew exponentially during the pandemic and seems to have become a permanent feature of working life in the U.S. According to a survey by Pew Research, 60% of employees whose jobs can be performed remotely are still working from home all or most of the time. Another 18% of such employees report working from home at least some of the time.
Along with the explosion of remote work came a massive increase in employees using their own computers, tablets and mobile phones for work. Allowing employees to use their own devices brings with it the risk that that company data will migrate to the devices.
Governor Pritzker has signed a bill creating Illinois’ first comprehensive statute regulating the use of non-compete and non-solicit covenants. The law establishes bright-line, compensation-based rules regarding which employees can be required to sign such covenants and creates a mandatory pre-signature process designed to protect employees. The statute also codifies existing Illinois case law without changing it substantially.
Bad facts make bad law, the saying goes. In the non-compete world, it might more aptly be said that filing a weak lawsuit against a sympathetic defendant makes bad law.
A recent decision by the Illinois Appellate Court is a good example. The court refused to enforce a non-solicitation agreement that many judges would have upheld under the right circumstances. The likely (if unspoken) reason? The defendant was a low-wage employee who fixed car dents for a living and who hadn’t done anything particularly wrong after quitting his job.
It is well-settled that a non-compete must include a reasonable time limitation in order to be enforceable. Most employers understand this requirement and limit the duration of the their non-competes (and non-solicits) to 2 years or less.
But what about confidentiality/non-disclosure provisions in employment agreements? Must they also contain time limitations?
When it comes to non-competes in the health care industry, the doctor/patient relationship has sometimes taken a back seat to business considerations. That is changing in Indiana, where a new law adds requirements for physician non-competes that will make it easier for patients to follow their doctor to a new practice group or medical center. Continue reading →
A common issue when advising an employee changing jobs is how to deal with company information on the employee’s phone or personal laptop. Should the employee simply delete it? Or should a forensic copy be made before deletion to preserve evidence in anticipation of litigation?
A recent decision by U.S. District Court for the Northern District of Illinois gives comfort to those who opt for the more pragmatic approach of simply deleting the data. Even so, the case suggests steps that could have been taken to avoid litigation and a claim of destruction of evidence. Continue reading →
When is a preliminary injunction not really a preliminary injunction? When it is contained in the body of the opinion granting the injunction, rather than being made a stand-alone injunctive order – at least according to the U.S. Court of Appeals for the Seventh Circuit.
Long used in the U.K., garden leave is becoming increasingly popular with employers in the United States as an alternative to traditional non-compete agreements.
Garden leave provisions take several different forms, but the key feature is that the employee is paid to sit out before starting his or her new job. The payment of compensation mitigates the impact on the employee, especially as compared to a non-compete where no payment is required and the employee may suffer a significant loss of earnings. Garden leaves are also generally shorter than non-competes—30 to 90 days—rather than one or two years as with many non-competes.Continue reading →