California Statute Does Not Void Promise Not to Compete During Employment

Non-Compete, California, Employment Agreements, Techno Lite, Emcod

Many believe that a non-compete agreement is never enforceable in California. A recent decision by the California Court of Appeal shows that there may be some protection afforded by such an agreement, at least as against competition during the employment relationship. Continue reading

1st Circuit Bars Pharma Executive From Working For Competitor For 18 Months

Non-Compete, Non-Solicit, Nondisclosure, CVS, PillPack, Rhode Island

After working for nearly three decades at CVS Pharmacy, Inc., including in senior-level jobs, John Lavin accepted a new position at a company called PillPack LLC, a direct competitor of CVS. PillPack is an online retail pharmacy founded in 2013 and wholly owned by Amazon.

At four points during his employment as a senior vice president, CVS required Lavin to sign a restrictive covenant agreement (“RCA”). Each RCA contained non-competition, non-solicitation, and nondisclosure covenants. The RCAs defined competitors of CVS but contained no geographic limitations. Each time Lavin signed a RCA, he was awarded CVS stock.

CVS Obtains A Preliminary Injunction Enforcing The Non-Compete

CVS sued Lavin and moved for a preliminary injunction, which was granted. Continue reading

Blue Pencil Really “Just an Eraser” — Indiana Courts Cannot Fix Overbroad Non-Competes By Adding New Terms

Non-Compete, Non-Solicit, Indiana, blue pencil doctrine, Employment Agreements

The Indiana Supreme Court[1] has reaffirmed its narrow interpretation of the “blue pencil” doctrine, holding that courts may not add terms to an overbroad non-solicitation or non-competition provision to make it reasonable even if the contract has a reformation clause.

As the court puts it: “This doctrine … is really just an eraser.”   Continue reading

New Efforts On All Sides to End Non-Compete Agreements

Non-Compete, Employment Agreements, Restrictive Covenants, Senate Bill 2614

Non-compete agreements are in the cross-hairs of both federal and state officials, who are looking to ban non-competes in many instances. Senate Bill 2614, introduced on October 16, 2019, if enacted, would outlaw most non-compete agreements as a matter of federal law. There would be a few limited exceptions. In addition, the Attorneys General of nearly twenty states and the District of Columbia have urged the Federal Trade Commission to use its rulemaking authority to end the use of non-compete clauses in employment contracts. Continue reading

The Devil Is in The Details: Second Circuit Reverses Injunction For Lack of Specificity Required by Rule 65

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A recent decision by the U.S. Court of Appeals for the Second Circuit serves as a timely reminder of the importance of complying with Rule 65’s requirement that injunctions describe the prohibited conduct “in reasonable detail.” Fail to comply and you could find yourself with an invalid injunction. Continue reading

Inevitable Disclosure Is No Substitute For Post-Employment Non-Competition Provision

Non-Compete, Nondisclosure, Trade Secrets, Illinois, Inevitable Disclosure

In reversing the trial court’s grant of a preliminary injunction, the Illinois Appellate Court in Archer Daniels Midland Company v. Sinele et al., (2019 IL App 4th 180714, decided February 1, 2019) reminds employers that the doctrine of inevitable discovery is not a foolproof substitute for enforceable post-employment restrictions on competition.  Continue reading

Garden Leave– British Import Growing in Popularity Here

Non-Compete, Employment Agreements, Restrictive Covenants, Garden Leave

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