The economic carnage unleashed by the COVID-19 virus has disrupted virtually every industry in the United States.  At last count, more than 38 million workers had lost their jobs and made claims for unemployment benefits.  And while states have begun easing restrictions on the ability of many businesses to reopen, it is reasonable to expect there will be further turnover, leading to the departure of many employees to competitors.  Feeling more vulnerable because of the downturn, employers will inevitably look to enforce restrictive covenants, including non-competes and non-solicitation agreements, against those former employees.  How will courts tend to handle requests to enforce restrictive covenants, especially non-competes, in this difficult economy?  One guide may be looking at how they handled similar requests during the last economic downturn in 2008 in the state of Ohio.
Continue Reading Back to the Future: Do Restrictive Covenant Cases from the 2008 Recession Offer Clues to How Courts Will Rule in the Aftermath of COVID 19?

As you will see, I have changed the format of my monthly wrap up post in two ways.  First, I am going to start including links to noteworthy decisions that I come across or are forwarded to me.  Unfortunately, since neither I nor other bloggers writing in this space can cover everything, this will be a useful feature for those practicing in this area.  Second, I am going to provide more commentary on some posts and cases, in the hope of creating further dialogue on many trade secret and non-compete issues.  Given the hot button nature of some of these issues, I am going to share my thoughts, for whatever they are worth.  Now, on to posts and links from the last month:

Legislative Developments

  • Last week, Democratic Senators Elizabeth Warren, Chris Murphy and Ron Wyden announced their intention to introduce the Workers Mobility Act (WMA) that would abolish non-competes throughout the United States.  As many of you will recall, Senator Murphy previously introduced a similar bill, the Mobility and Opportunity for Vulnerability Employees Act (MOVE) but that bill stalled on the Senate floor.  Russell Beck has a post with a link to the House and Senate bills, along with his well-reasoned concerns about the breadth and scope of the bills.
  • A blog post about legislation over non-competes wouldn’t be complete if there wasn’t some mention of some activity in Massachusetts.  Key features of the latest bill under serious consideration would limit non-competes to 12 months (unless the employee stole trade secrets or breached his fiduciary duty) and finally adopt the UTSA.  For more details, see Russell Beck’s post in his Fair Competition Blog.
  • Idaho (repealing its recent changes in 2016) and Utah (restricting their use against broadcasters) have recently amended their statutes addressing restrictive covenants.  See Russell Beck again.
  • Colorado has modified its law affecting physician non-competes, carving out protections for physicians treating patients with rare genetic disorders to eliminate any interruption of care for those patients.  Peter Greene summarizes the changes in Epstein Becker’s Trade Secrets & Employee Mobility Blog.


Continue Reading Monthly Wrap Up (May 8, 2018): Noteworthy Trade Secret and Non-Compete Cases, Developments and Posts

Employers who want to hire from a competitor frequently have to contend with the potential fallout from the new employee’s non-compete.  Any misstep in that hiring process can easily lead to costly and time-consuming litigation.  If an employer wants to go forward with that hire but try to minimize its risk of litigation, one popular approach is to implement affirmative steps safeguarding the prior employer’s trade secrets and avoiding solicitation of the former employer’s customers (see my previous posts on how that strategy has been used successfully by Hewlett Packard and Google in other cases).  However, there is another more unconventional approach:  paying an employee to sit out the duration of her non-compete (what is known as a “garden leave”) and indemnifying that employee from a future lawsuit so long as she abides by her non-compete.  This approach was successfully implemented in a recent dispute in the highly competitive and apparently lucrative e-discovery market.  The case, Document Technologies, Inc. v. LDiscovery, LLC, 17-2659-cv (2nd Circuit  April 24, 2018), offers a nice case study on the use of indemnity provisions to defuse allegations of breach and provides a roadmap for employers who may have the pocket book to support this approach.

Continue Reading A Well-Drafted Indemnity And Garden Leave Thwart A Non-Compete In New York