Category Archives: Non-Compete

FTC Announces First of Their Kind Enforcement Actions on Non-Competes

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Non-Compete, Restrictive Covenants, Federal Trade Commission, Non-Solicit, Employment Agreements

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.

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Remote Work & Employee Exits – New 7th Circuit Decision Faults Employer for Not Demanding Deletion of Company Data from Personal Devices

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Remote Work, Non-Compete, Confidential Information, Personal Devices

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.[1] 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.

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Illinois Adopts Comprehensive Non-Compete Statute Effective January 1, 2022

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Non-Compete, Non-Solicit, Employment Agreement, Restrictive Covenant, Illinois

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.

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Employer Gets Dinged When Illinois Court Refuses Request for Partial Enforcement of Non-Compete Against Low-Wage Worker

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Confidentiality Clauses, Non-Compete, Non-Solicit, Confidential Information, Illinois

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.

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Non-Disclosure Clauses in Employment Agreements Held Void Under Wisconsin Law for Lack of Time Limitations

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Non-Compete, Nondisclosure, Trade Secrets, Wisconsin, Confidential Information

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?

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Mind Your Jurisdiction

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Non-Compete, Restrictive Covenant, Remote Work, Illinois

Can a former employee be sued for violating a non-competition agreement in a State the employee has never set foot in? The answer, according to the U.S. District Court for the Northern District of Illinois in Tekway, Inc. v. Agarwal, 19-CV-6867 (Oct. 7, 2020), is quite likely “Yes” if that State is where the employer is based and the employee has “directed” conduct to that State.

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Parties’ Choice of Ohio Law Supports Partial Enforcement of Non-Competition Agreement

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Non-Compete, California, Ohio, Choice-of-Law

A new decision from the U.S. Court of Appeals for the 6th Circuit reminds us how important choice-of-law can be in non-compete agreements. In this case, the choice of law clause was likely the difference between success and failure for an employer seeking an injunction enforcing its non-compete. Continue reading →

The Eighth Circuit Puts the Brakes on Legitimate Competition

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Non-Compete, Intentional Interference, Employment Agreements, Legitimate Competition

Does a new hire having a non-compete expose the hiring firm to liability for improper interference, even where the new hire contacted the firm in response to general advertising and there was no targeted recruiting? The answer appears to be yes, at least according to a recent decision by the U.S. Court of Appeals for the Eighth Circuit.  Continue reading →

Be Careful With Your Non-Compete Agreements When You Rehire Employees

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In a decision that may contain some useful reminders as businesses rehire employees who were let go during the coronavirus pandemic and economic downturn, the U.S. Court of Appeals for the First Circuit recently handed down a decision affirming the denial of a former employer’s request to enforce a non-competition agreement against an employee it had terminated and then rehired. Russomano v. Novo Nordisk Inc., No. 20-1173 (Ist. Cir. June 2, 2020). 

The employer did not have the employee sign a new agreement upon rehire, but instead tried to rely on the his original agreement. The First Circuit held that the non-compete ran from the date of the employee’s original termination and expired one year into his rehire, leaving him free to compete after its expiration. Continue reading →