Top 10 Non-Compete Law Developments of 2021

The top 10 non-compete law developments in 2021 demonstrated a continued hostility by lawmakers and courts toward noncompetition and no-hire agreements, as well as the need for employers to stay current on the diverse state-specific limitations governing restrictive covenants, new federal activity in the area and ongoing case law developments. In light of these trends, national employers would do well to (1) be selective in identifying those categories of employees required to sign such agreements, (2) rely on allowable choice-of-law and venue provisions to maximize the chances of enforceability, (3) keep a keen eye on likely federal developments in the year ahead and (4) avoid no-poach agreements with employers as a poor substitute for narrowly tailored employee non-compete agreements.

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Germany Restricts Access to Non-Essential Businesses for Unvaccinated Individuals

Germany announced that it will impose new restrictions on individuals who are not vaccinated. Although an official version of the rules has yet to be released, Germany’s government website has provided a summary of the new restrictions.

Based on that summary, individuals who have not been vaccinated are allowed to shop only in grocery stores, pharmacies and drugstores. Only individuals who have been vaccinated or have recovered from COVID-19 are allowed to enter all other stores. Restaurants, cinemas, movie theaters, and other “leisure facilities” are limited to vaccinated and recovered individuals as well.

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Navigating the American Rescue Plan’s Employment-Related Provisions

On March 12, 2021, the American Rescue Plan Act of 2021 (ARP) was signed into law, providing an estimated $1.9 trillion stimulus package to address the ongoing COVID-19 pandemic. Some of the ARP’s key provisions include a number of employment-related sections that build upon prior legislation to create a scaffold of employer obligations and worker entitlements arising from the pandemic’s impact on the U.S. economy.

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Minnesota Employers Are Given the Green Light to Return to the Office, Subject to Continued Limitations

On March 12, 2021, nearly one year to the day after Minnesota declared a peacetime emergency in response to the COVID-19 pandemic, Governor Tim Walz issued Executive Order 21-11, which rolls back certain restrictive measures aimed at limiting the spread of the coronavirus.

Chief among the changes is a relaxation of the mandate that all employees who are able to work remotely must do so. Commencing on March 25, 2020, pursuant to Executive Order 20-20, Minnesota employees have been required to work remotely whenever they are able. This requirement will cease on April 14, 2021, at 11:59 p.m. Employers are now strongly encouraged to allow Minnesota-based employees to work from home when they are able to do so. Employers are also strongly encouraged to implement reasonable accommodations for those employees who are at-risk for infection or who reside with a household member with an underlying medical condition that has not yet become eligible for vaccination. This softens obligations previously set forth in Executive Orders 20-54 and 20-55 in light of the expanded access to COVID-19 vaccinations.

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Minnesota Supreme Court Rules That Handbook Policies Can Be Contractual Notwithstanding Disclaimer

On February 3, 2021, the Minnesota Supreme Court decided Hall v. City of Plainview, holding that a general contract disclaimer in an employee handbook did not, as a matter of law, nullify a breach of contract claim with respect to a paid time off (PTO) policy within the handbook. As the Hall Court explained, the PTO policy at issue was sufficiently detailed to create a unilateral employment contract such that the employer would be obligated to follow its terms. The decision reminds employers of the importance of careful planning and drafting when it comes to their PTO policies. In light of the Court’s holding, employers should also review their handbooks for other policies and procedures that could be construed as contracts.

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D.C. Signs Broad Ban on Noncompetes and Anti-Moonlighting Policies

With the issuance of the D.C. Ban on Non-Compete Agreements Amendment Act of 2020 (the Act), the District joins the growing list of jurisdictions subjecting noncompetes to intense scrutiny. D.C.’s Act goes much further though, and once in effect will be one of the broadest limitations on such agreements in the country. While the Act’s precise effective date remains unclear, employers should begin reviewing their existing policies and form agreements now to ensure compliance with the sweeping prohibitions.

For the full alert, visit the Faegre Drinker website.