Non-Competes / Trade Secrets Archives - Page 3 of 11

DC Finally Prunes its Ban on Non-Competes

When initially enacted in January 2021, the District of Columbia’s Ban on Non-Compete Agreements Amendment Act was one of the broadest non-compete prohibitions in the country. Its effective date, however, was delayed on several occasions amid widespread criticism of its comprehensive scope. For more information about the original act and its subsequent delay, please see our previous posts on the matter here and here. The DC Council ultimately passed a scaled back version some 18 months later.

Effective October 1, 2022, the Non-Compete Clarification Amendment Act of 2022 (the “Amended Act”) limits the scope of the initial ban by narrowing of (a) the definition of a “non-compete provision” and (b) applicability to certain highly compensated employees (“HCEs”).

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Coming August 2022: Colorado Substantially Limits Noncompete Agreements

Beginning August 10, 2022, Colorado will drastically narrow the circumstances in which Colorado employers can seek to enforce noncompete and other restrictive employment agreements. Despite Colorado law already having a general restriction against the use of noncompete agreements, the Colorado General Assembly recently passed, and Gov. Jared Polis has now signed, HB 22-1317. With this bill, Colorado joins the growing number of states enacting increased employee protections against restrictive covenant agreements, including banning such agreements with workers earning below a certain threshold.

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U.K. Employment Law Update: Worker Status, Non-Compete Restrictions and COVID-19 Dismissal

Clarification on Worker Status

In Nursing and Midwifery Council v Somerville [2022] EWCA Civ 229, the Court of Appeal (CoA) considered whether an obligation on the part of a worker to perform a minimum amount of work was a prerequisite for worker status.

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Third Circuit Rejects Employer’s Attempt to Block Executive’s Move to Rival Despite Non-Compete Agreement

As we have written about previously, an increasing number of states, and Washington, D.C., have limited the circumstances under which employers can bind their employees to non-compete and similar agreements, particularly when low-wage workers (however defined) are involved. The courts, however, are not immune to the trend, as evidenced by the April 21, 2022 decision from the U.S. Third Circuit Court of Appeals, ADP, Inc. v. Levin. In that case, the Third Circuit affirmed a district court’s denial of a preliminary injunction against a senior executive who had resigned from his Chief Strategy Officer position at his prior employer, ADP, to take over the Chief Executive Officer position at rival Benefitfocus.

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DOJ Remains Committed to Aggressive Antitrust Enforcement Against Employers and Their Employees Even in the Wake of Recent Trial Defeats

The Department of Justice Antitrust Division (DOJ) recently suffered significant losses in two criminal trials involving alleged criminal wage-fixing and related “no-poach” agreements by and between competitors. These were the first cases ever where the parties have proceeded to trial after the DOJ pursued criminal charges under Section 1 of the Sherman Antitrust Act predicated on such conduct. The Sherman Act includes penalties for criminal violations of the statute that can reach up to $100 million per violation for companies, and individual defendants can face $1 million fines and up to 10 years in prison. While the DOJ’s trial setbacks raise legitimate questions regarding the efficacy of its aggressive antitrust enforcement agenda — particularly in labor markets — the primary federal agency tasked with enforcing criminal violations of federal antitrust laws shows no signs of pulling back on similar investigations and prosecutions in the future.

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Washington, D.C.’s Non-Compete Ban Delayed Again

The Washington, D.C. Ban on Non-Compete Agreements Act of 2020 (D.C. Act) is on hold once again, this time due to emergency legislation signed by Mayor Muriel Bowser earlier this week. The new legislation pushes the D.C. Act’s effective date from April 1 to October 1, 2022. As reported here, the D.C. Act is one of the most comprehensive bans on employee non-competition restrictions to date. It not only prohibits post-separation non-competes for employees working within the District (consistent with what a handful of states, including California, already do), but also rejects common “anti-moonlighting” provisions that prevent employees from working for another employer, including a competitor, during their employment.

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