Category Archives: Non-Compete

New Efforts On All Sides to End Non-Compete Agreements

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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

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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

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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 →

Evidence Does Not Support Nationwide Injunction Against Competition by Former Employee

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Confidentiality Clauses, Non-Compete, Restrictive Covenant, Employment Agreements, Nevada

The Nevada Supreme Court reversed an injunction entered by a district court, when it found the employer failed to put on sufficient evidence to justify an injunction enforcing a 50-state non-compete against a former employee. Here’s what happened. Continue reading →

Forfeiture of $2.6MM in Comp for Failing to Clean Out Home Office May Not Pass Muster

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Non-Compete, Nondisclosure, Employment Agreements, Minnesota, Restrictive Covenants

In the recent case of Capistrant v. Lifetouch National School Studios, Inc., No. A16-1829, 2018 BL 263415 (July 25, 2018), the Minnesota Supreme Court had occasion to consider whether a 25+ year employee’s failure to return all of his employer’s property immediately upon termination justified the forfeiture of $2.6MM in compensation. The case reminds us once again that employment agreements will not always be enforced as drafted. Continue reading →

Court Compels Arbitration of Non-Compete Claim Based on Arbitration Clause in Separate Agreement

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Non-Compete, Non-Solicit, Arbitration Provision, DTSA, Illinois

A federal court, in a non-competition setting, had to untangle the relationship between three separate agreements. One contained an arbitration provision but the others did not. Ultimately, the court determined that some parties had to arbitrate some claims but that others did not have to arbitrate.  Continue reading →

Indiana Appellate Court Upholds Liquidated Damages in Non-Compete and Non-Recruitment Provisions

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Employment Agreements, Liquidated Damages, Non-Solicit, Indiana, Non-Compete

by Ariane M. Janz

Liquidated damages provisions are supposed to simplify non-compete cases, but disputes over the enforceability of such provisions can have the opposite effect, complicating the matter and adding uncertainty. If a court determines that the liquidated damages are grossly disproportionate to the employer’s actual loss, the court may refuse to enforce the liquidated damages provision as an impermissible penalty.  Continue reading →

Court Allows Tortious Interference Claim to Proceed Against Attorneys Alleged to Have Directed Clients to Breach Non-Compete

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Non-Compete, Attorney-Client Relationship, Kentucky, Legal Malpractice, Tortious Interference

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.[1] Continue reading →

Don’t Let the Janitor [Rule] Sweep Away Your Non-Compete

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Non-Compete, Janitor Rule, Employment Agreements, Restrictive Covenants

A recent federal decision from the Northern District of Illinois again illustrates the perils of drafting and attempting to enforce overbroad restrictive covenants. In the case of Medix Staffing Solutions, Inc. v. Dumrauf, 17-cv-6648, 2018 WL 1859039 (N.D.Ill. Apr. 17, 2018)(Ellis, J.), Medix, a pharmaceutical, biotech and medical device company, attempted to enforce a non-compete agreement against its former Director, Dumrauf, who had been responsible for its medical sales and recruiting strategies and who had left to work for a direct competitor, ProLink.  Continue reading →