Highly valuable trade secrets, corporate espionage, elaborate schemes to evade detection, and national defense implications. Have I piqued your curiosity? I hope so. In this fifteenth article of The Restricting Covenant series, I discuss two cases that involve individuals and business enterprises charged by the federal government with stealing valuable trade secrets from U.S.-based companies. The stakes are extremely high on all sides.
Let me begin by explaining that this article does not focus on the janitorial profession and whether non-competes in that profession are enforceable. That’s a topic for another day. Instead, this fourteenth article in The Restricting Covenant series discusses a concept that some courts and litigants refer to as the “janitor analogy” or the “janitor test,” when analyzing or illustrating the overbroad scope of a non-compete provision.
In Any Capacity?
The janitor analogy is most often invoked in cases where the employer’s non-compete agreement prohibits a former employee from being employed or affiliated with a competitor “in any capacity” or “in any manner.”
If you’ve ever purchased an automobile, you know that haggling for a good deal is either the best, or the worst, part of the car-buying experience. That new car smell is pretty memorable too. No matter the aroma or the final purchase price, however, in order to drive home in that shiny new vehicle, you ultimately must agree to give the dealership a certain amount of money, known in legal terms as “consideration.” This concept of consideration is equally important in the non-compete world, as explored in this twelfth article in The Restricting Covenant Series, through the lens of a hypothetical car salesman.
In this eleventh article in the continuing series “The Restricting Covenant,” I discuss the “Restatements of the Law,” which, while not law per se, are important secondary legal sources that should not be overlooked when tackling thorny restrictive covenant disputes.
Relevance of the Restatements in Non-Compete Cases
In many states, decisions regarding the validity and enforceability of non-compete agreements are made pursuant to the “common law.” The common law is a body of law developed over a course of time from judicial decisions and rulings. The Restatements of the Law attempt to “restate,” organize, and explain the common law of the United States. They are organized into 15 different areas of law, including Agency, Conflict of Laws, Contracts, Judgments, Property, Restitution, Torts and Trusts. They are published by the American Law Institute (ALI) and written by professors, judges and private attorneys. Each “statement of law” has a specific section, and each section is accompanied by “Comments,” “Illustrations” (with hypos), and “Reporter’s Notes” (with case citations).
*Originally published by CalCPA in the January/February 2018 issue of California CPA — the original article can be found here.
You may not have expected that the California Legislature in 2017 designated an official state dinosaur (Augustynolophus morrisi) and four state nuts (almond, pecan, walnut and pistachio), which are technically seeds, but that’s a separate article. Less surprising is that employer regulation and employee rights continue to expand in our state, the sixth-largest economy of the world. The rate of expansion, however, seems to have taken another pendulum swing: 304 bills introduced in 2017 mention “employer,” compared to 569 bills in 2016 and 224 in 2015. Most of those bills did not pass, and of the ones that did, most were not signed into law by Gov. Brown. Essential elements of several bills that became law affecting private employers, effective Jan. 1, 2018, unless noted otherwise, follow.
As allegations of sexual misconduct continue to surface almost daily against high-profile individuals, some legislators have responded by proposing legislation curtailing the use of non-disclosure (NDA) and confidentiality agreements. Critics have opined that such agreements (particularly as used by Harvey Weinstein) have enabled victimizers to conceal and continue long-running patterns of sexual misconduct, in that they prevented discussion of the accusations among both the victims and others, such as co-workers, who knew of the victimization.
In October, California State Senator Connie Leyva announced that she would introduce “legislation to ban secret settlements (confidentiality provisions in settlement agreements) in sexual assault, sexual harassment and sex discrimination cases” when the California Senate reconvenes in early January 2018. On November 15, Pennsylvania State Senator Judy Schwank stated in a press conference that she would introduce a bill that prospectively bans contractual provisions “prohibit[ing] a person from revealing the identity of a person who committed sexual misconduct” and voids any such provisions entered into under duress or incapacity, or by a minor, prior to the law’s enactment.