Noncompetes Under New State Law Restrictions: Wage Requirements, Notice, Time, Layoffs, Proposed Federal Legislation
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Employment and Workers Comp
- event Date
Wednesday, June 29, 2022
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will discuss the latest state legislative changes and case law trends regarding noncompete agreements and other restrictive covenants in New York, California, Illinois, Washington, and other states and the current status of proposed changes to federal labor law. The panel will offer best practices for structuring enforceable contracts and explain how to determine whether existing agreements are lawful.
Mr. Bindra focuses his practice on employment and executive agreements, noncompete, non-solicit and trade secret disputes, business consulting, executive career counseling, appeals, whistleblower claims, employment arbitration agreements, unpaid wages, and employment discrimination. He has extensive experience working with executives physicians, and corporations. Mr. Bindra was also one of the lead architects and drafters of an amendment to the Illinois Freedom to Work Act that significantly reformed how noncompete and non-solicit agreements are litigated in the state of Illinois. He testified in support of the law and helped bring together a bipartisan coalition of support. As a result, the amendment passed with unanimous support in the Illinois legislature in 2021.
Mr. Milligan Co-Chairs the firm's Trade Secrets, Computer Fraud & Noncompetes Practice Group. His practice encompasses a wide variety of commercial litigation and employment matters, including general business and contract disputes, unfair competition, trade secret misappropriation and other IP theft, franchise litigation, and other business torts. His practice focuses on trade secret, noncompete and data protection litigation and transactional work on a state, national and international platform. Mr. Milligan serves as Chair of the ABA Intellectual Property Section’s Trade Secrets and Tortious Interference Committee.
Ms. Redmond is a partner in the Labor and Employment Practice Group in the firm's San Francisco office and is Leader of the firm's Noncompete and Trade Secrets Team. She is also a member of the firm's Compensation Committee.
Noncompetition provisions in employment agreements and, to a lesser extent in business purchase agreements, have long been the target of state regulation. The rationale is that restraints on trade remove employees from the job market and, in the acquisition context, may remove property from commerce.
From New York's requirements that noncompetes protect only an identified and legitimate business interest to California's near ban on noncompetition restrictions, states are increasingly passing legislation limiting these agreements' enforceability. Statutes have imposed income minimums for enforceability and required release if the employee is terminated without cause. Some states mandate that independent consideration be paid to employees to create enforceability and narrow the time frame for enforcement. State laws also address whether a noncompete would apply to agreements between two businesses exiting a joint venture.
State laws that apply strict requirements to noncompetition agreements attempt to limit use in industries and positions that do not require particular technical expertise and skills. The statutory differences between states make it difficult for employers with regional or national reach to implement uniform noncompetition policies. These differences can frequently lead to complicated conflict-of-law issues, especially when employees move between states or work in different states for the same employer. This often leads to the courts of one state applying the law of another and can sometimes bring about unpredictable results.
The Federal Trade Commission and Department of Justice held a public workshop in December 2021 that continued to support the potential creation of a rule to restrict noncompetition clauses in employer-employee contracts throughout the United States. It is currently unclear how the federal government can synchronize different state approaches, and it is unclear if this is an administration priority for the labor market.
Listen as our expert panel discusses this evolving issue to provide employment counsel with practical advice on drafting and negotiating noncompetition provisions in light of current state-specific restrictions.
- Overview of noncompetition agreements
- Use in an employment contract
- Use in business sales, joint ventures, other non-employment settings
- Common state restrictions
- Minimum income
- Release in the event of layoffs
- Independent consideration
- Legitimate business interest
- Highly skilled employees
- Time, geography, scope
- State-specific
- California
- New York
- Illinois
- Washington
- Maryland
- Others
- Federal response
The panel will review these and other issues:
- What caused the growth in the use of noncompetition provisions in employment contracts?
- How and why are states restricting the use of noncompetition agreements?
- How can a noncompetition provision be properly implemented in non-employment situations?
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