Delaware Chancery Court Declines to Blue-Pencil Overly Broad Noncompete Agreement; Casts Doubt on Choice of Law Provisions

A recent Delaware Chancery Court opinion has elucidated Delaware’s approach to judicially modifying, or “blue-penciling,” overly broad noncompete agreements and deferring to parties’ choice of law provisions. The case, FP UC Holdings, LLC, et al. v. James W. Hamilton, Jr., et al., C.A. No. 2019-1029-JRS (Del Ch. Mar. 27, 2020), highlights the importance of drafting well-tailored restrictive covenants, and shows that even in Delaware – where employers often have been reassured by the safe harbor of courts’ relative willingness to blue-pencil problematic agreements and apply Delaware law to fact patterns that have developed in other states – employers must make careful drafting and choice of law decisions. It also emphasizes that if an employer’s intent is to litigate in Delaware, the employer should do so from the beginning, without acquiescing to another court’s jurisdiction.

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More States and Municipalities Impose Mandatory Face Covering and Other Workplace Protections

After an initial wave that saw a focus on closing or limiting “non-essential” or “non-life sustaining” businesses and limiting individual travel, states and municipalities have shifted their attention to protections for those who are continuing to work and travel as they perform essential personal and professional functions. The primary, but not only, area of such focus is on mandating the use of cloth or fabric masks. This change has come as more has become known about how the highly infectious coronavirus spreads, with the Centers for Disease Control and Prevention (CDC) now recommending that cloth face coverings be worn “in public settings where other social distancing measures are difficult to maintain,” such as grocery stores and pharmacies, “especially in areas of significant community-based transmission.”

These new orders vary in their scope and strictness. The Pennsylvania Department of Health, for example, has issued an order requiring masks to be worn by employees of businesses authorized to maintain in-person operations and further requiring employers to provide such masks. The Pennsylvania order also requires most shoppers to wear masks before entering most stores.

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Expanded Unemployment Insurance Access and Benefits: 4 Key Takeaways from the CARES Act

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law, providing an estimated $2 trillion stimulus package to address the COVID-19 pandemic. Although the CARES Act has a number of employment-related provisions (as discussed here), a central piece of the legislation expands existing unemployment insurance programs, making far more individuals eligible and providing greater benefits than existing programs. As employers consider workplace actions during this time of uncertainty, understanding the impact of the new unemployment insurance landscape and the options available will inform employers as they make critical decisions suited to their circumstances and workforce.

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Governor Wolf Issues “Stay at Home” Order for Certain Pennsylvania Counties

Updates:

  • 3/27/2020: Governor Wolf has amended his order to include residents of Berks, Butler, Lackawanna, Lancaster, Luzerne, Pike, Wayne, Westmoreland, and York Counties. The amended order is available here.
  • 3/25/2020: Governor Wolf has amended his order to include residents of Northampton and Lehigh Counties. The amended order is available here.
  • 3/24/2020: Governor Wolf has amended his order to include residents of Erie County, in addition to the seven counties previously impacted. The amended order is available here.

Original Post:

Effective Monday, March 23, 2020 at 8:00 p.m., residents in Philadelphia, Allegheny, Bucks, Chester, Delaware, Monroe, and Montgomery counties are required “to stay at home except as needed to access, support or provide life-sustaining business, emergency or government services.”  Residents are permitted to “engage in outdoor activities,” but gatherings are prohibited, and anyone leaving home must practice social distancing and other mitigation efforts.

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Pennsylvania Businesses Ordered to Shut Down their Physical Operations If Not “Life Sustaining”

UPDATES

  • 3/20/2020: The Wolf administration has updated the list of what it deems a “life sustaining” business. The updated list is here. Business now identified as life sustaining that were not previously included include: forestry, logging, and support activities; mining (including coal and metal ore mining) and support activities; specialty food stores; insurance carriers and related activities (except in-person sales brokerage); insurance and employee benefit funds; accounting, tax preparation, bookkeeping, and payroll; traveler accommodation; and dry cleaning and laundry services. Businesses that were previously designated as “life sustaining” but no longer carry that designation (and therefore must close in-person facilities) include beer, wine, and liquor stores (except beer distributors) and civic and social organizations. The governor’s press release announcing the updates is here. The administration has made clear that this is “an evolving situation and decisions will continue to be made and revisited as needed.”
  • 3/20/2020: Businesses seeking an exemption to the closure Order may do so via this website. Businesses are required to provide a justification as to why the operation is “life-sustaining,” and must state the number of employees required to be on-site to perform the “critical work.” Businesses must also describe plans to comply with CDC guidelines and mitigation efforts.
  • 3/21/2020: Governor Wolf amended the enforcement deadline from his original shutdown Order. Enforcement on non-compliant businesses will begin Monday, March 23 at 8:00 a.m., and not on Saturday, March 21, as previously ordered.
  • 3/21/2020: The Department of Community and Economic Development has issued a set of Frequently Asked Questions and responses to provide additional guidance regarding Governor Wolf’s shutdown Order. The FAQ responses indicate that authorities should make compliance determinations based on the operations of a particular facility, rather than the business as a whole. For example, construction businesses (which are identified as non-“life sustaining”) may continue working on road repair and similar emergency efforts, but must suspend other activities that are not “clearly authorized” as life sustaining. Further, in response to a question about whether businesses may “maintain limited in-person essential personnel for security, processing of essential functions, or to maintain compliance with federal, state or local regulatory requirements,” the DCED states that businesses suspending physical operations pursuant to the Order “must limit on-site personnel to maintain critical functions,” while following social distancing and other mitigation guidelines. The FAQ responses also indicate that enforcement “should be prioritized to focus on businesses where people congregate,” and that although enforcement measures are within the discretion of the state or local agency, the administration expects that enforcement will be progressive, and will start first “with a warning to any suspected violator.” The FAQ responses also clarify that hotels and motels, as well as local governments and municipalities, are not required to cease physical operations.

On Thursday, March 19, 2020, Pennsylvania Governor Tom Wolf ordered all Pennsylvania businesses that are not “life sustaining” to shut down physical operations by Saturday, March 21 at 12:01 a.m.  A copy of the Order is here.  Such business may continue to operate on a virtual or telework basis, “so long as social distancing and other mitigation measures are followed.”

The Order specifically exempts “life sustaining businesses,” which may remain open subject to those businesses undertaking the same social distancing and mitigation measures.  Similarly, the Order allows “businesses that offer carry-out, delivery, and drive-through food and beverage service” to continue operations, subject to the same social distancing and mitigation measures.  The Order incorporates a list of life and non-life sustaining businesses, which can be found here.

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