In the best of economic times, some courts can be reluctant to grant immediate injunctive relief and enjoin an employee from working in order to enforce employee post-employment restrictive covenants. Now that we are in the midst of a global pandemic and an economic recession, that challenge has grown. Current economic considerations are causing some courts to weigh the “balance of harms” on injunctive relief applications in favor of employee defendants who are faced with the difficulty of finding other work in an economic downturn with high unemployment. Nevertheless, our review of recent decisions from around the country indicates that courts remain willing to consider injunction motions on an emergent basis to enforce restrictive covenants, particularly where there is a threat of trade secret misappropriation.
In the wake of the Supreme Court’s landmark ruling in Bostock v. Clayton County, Georgia, which extended federal statutory protections to the LGBT community, many have wondered how that decision might impact other employment litigation under Title VII of the Civil Rights Act of 1964. The Tenth Circuit’s recent decision in Frappied v. Affinity Gaming Black Hawk, LLC, No. 19-1063 (10th Cir. 2020), suggests that, following Bostock, courts may begin to recognize new claims or even reconsider prior limitations on Title VII’s scope.
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COVID-19 has reached virtually the entire country, and both employers and employees in a broad range of industries have experienced outbreaks. At the same time, the government and private sector continue to take steps to slow the virus’s spread and protect employees while adapting to the new business environment. In recognition of the unique challenges posed by COVID-19, the Occupational Safety and Health Administration (OSHA) is applying updated guidance in an effort to provide additional clarity to employers and workers.
Class action litigation under the Illinois Biometric Information Privacy Act (BIPA) has exploded over the last several years. An ongoing issue has been the proper forum for such cases, namely whether there is constitutional, Article III “standing” for BIPA claims to proceed in federal court. A May 5 ruling out of the Seventh Circuit Court of Appeals brought much-needed clarity to the issue by holding that a federal court could hear certain BIPA claims.
If there was any question about whether there is a growing national trend to limit the enforceability of noncompetition agreements, 2019 settled the matter. Seven states enacted new statutes designed to limit the circumstances in which noncompetition agreements may be used. The Federal Trade Commission (FTC) announced that it is considering a regulation to restrict the use of noncompete clauses in employment agreements, and Republican lawmakers on Capitol Hill have held hearings and introduced legislation to create a federal ban on certain noncompete restrictions.
The following is a summary of the top 10 noncompete law developments of 2019. These developments reflect an ever-increasing hostility by lawmakers and courts toward noncompetition agreements. They also demonstrate 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 this trend, national employers would do well to: be selective in identifying those categories of employees required to sign such agreements; narrowly tailor the scope of such agreements; and rely on choice-of-law and venue provisions, as allowed, to maximize the chances of enforceability.