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 →
Can an attorney who allegedly counsels a client to breach a non-compete be sued by the client’s employer for tortious interference with contract? The answer may be yes, at least according to the U.S. District Court for the Western District of Kentucky, which recently refused to dismiss such claim in Pinnacle Surety Services, Inc. v. Mannion Stigger, LLP.Continue reading →
Variations in non-compete law from state to state can be frustrating for employers with multi-state workforces. A restriction that works in one state might be invalid in another.
A common fix is to include a choice-of-law clause designating a state that favors enforcement of non-competes, but the enforceability of such clauses also varies widely in different jurisdictions. That’s why the Northern District of Illinois’ recent PCM Sales, Inc. v. Reed decision enforcing an Ohio choice-of-law clause against an Illinois employee is a big win for employers. Continue reading →
Most severance agreements these days specify that nothing in the agreement prevents the employee from speaking with regulators about possible violations of the law. This is due to regulators’ concerns that the confidentiality clause that is standard in severance agreements may chill employee whistleblowing.
But what about other employment agreements that have confidentiality clauses?
Employees sign all sorts of agreements with confidentiality restrictions, ranging from offer letters to deferred compensation award agreements. Must these agreements also exempt whistleblowing from their confidentiality obligations?