California Non-Compete and Trade Secret Catch-Up

Non-Competes

California is notorious in the non-compete world for its prohibition and extreme scrutiny of individual non-compete and other types of restrictive covenant agreements. These types of agreements between two businesses, however, have received less attention.

In August, the Supreme Court of California in Ixchel Pharma, LLC v. Biogen, Inc., 470 P.3d 571, 573 (Cal. 2020), examined an agreement between two businesses and found “that a rule of reason applies to determine the validity” of business-to-business non-compete agreements. While some commentary on Ixchel has examined the validity of business-to-business non-compete agreements, the larger focus of the Ixchel case was “whether contractual restraints on business operations or commercial dealings are subject to a reasonableness standard under [California Business and Professions Code] section 16600.” Id. at 581 (emphasis added). It is important to note that the Ixchel court reiterated California’s strong position that agreements not to compete related to the termination of employment are invalid and not subject to a reasonableness test. Id. at 583-584. The Ixchel court adopted the reasonableness standard from the Cartwright Act (California’s antitrust law which generally assesses whether an agreement promotes or suppresses competition) for application to business-to business non-competes and further stated that its decision potentially affects all California contracts “that in some way restrain a contracting party from engaging in a profession, trade, or business.” Id. at 581, 588.

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New California Laws for 2021: What Employers Should Know

Several new laws in California impact employers in a multitude of operational areas. From leave regulations to workers’ compensation, safety enforcement, wages and more, business leaders have much to research when it comes to compliance. All employers with operations in California should be aware of these new laws, understand how these laws may affect their operations and consult with counsel to address any questions on these new obligations.

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The Impact of COVID-19-Related Factors on Courts’ Enforcement of Employee Post-Employment Restrictive Covenants

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.

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Philadelphia Expands Paid Sick Leave During COVID-19

On September 17, 2020, Philadelphia Mayor Jim Kenney signed the Public Health Emergency Leave (PHEL) bill. The PHEL amends Chapter 9-4100 of the Philadelphia Code to create additional sick leave protections for Philadelphia employees during a public health emergency — specifically COVID-19.

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New U.K. Job Support Scheme to Take Effect November 1

A new Job Support Scheme designed to protect jobs in businesses facing lower demand over the winter months due to the COVID-19 pandemic will take effect November 1, 2020 and last for six months, the U.K. government announced on September 24, 2020. It will replace the U.K. Coronavirus Job Retention Scheme (known as the U.K.’s furlough scheme), which will come to an end on October 31, 2020.

For the full alert, visit the Faegre Drinker website

Pennsylvania Federal Judge Strikes Down Key Provisions in Governor Wolf’s COVID-19 Orders

In a decision issued on September 14, 2020, U.S. District Court Judge William S. Stickman IV ruled that certain restrictions ordered by Pennsylvania Governor Tom Wolf to slow the spread of COVID-19 were unconstitutional. Judge Stickman’s decision comes after several other Pennsylvania courts upheld the restrictions as being within Wolf’s authority and courts in other states had upheld similar types of orders.

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