Confidentiality and Nondisclosure Agreements (California) – 2022

Los Angeles partner Mark Terman and associate Maria Cho have provided an annual update to a Practical Law article, entitled “Confidentiality and Nondisclosure Agreements (California).” In their article, Mark and Maria discuss how companies can protect their information, including the use of confidentiality agreements and related practices, under California law. They also outline practical tips on developing internal systems and contract provisions designed to protect a company’s sensitive information, including its business assets and relationships, data security and trade secrets.

Practical Law™, a division of West Publishing Corporation, provides legal know-how for business lawyers. It also acts as secretariat for the GC100 group of general counsel and company secretaries.

Continue reading “Confidentiality and Nondisclosure Agreements (California) – 2022”

The Fate of Non-Compete Agreements in New Jersey Remains Unknown

New Jersey may become the latest state to join the growing trend of states enacting legislation to limit the use of common restrictive covenants, such as non-compete and non-solicitation agreements. In May of 2022, Assembly Bill 3715 (“A3715”) was introduced in the New Jersey legislature which, if passed, would significantly impact employers’ ability to enforce non-compete agreements and impose significant obligations aimed at deterring employers from entering into such agreements.

Continue reading “The Fate of Non-Compete Agreements in New Jersey Remains Unknown”

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”).

Continue reading “DC Finally Prunes its Ban on Non-Competes”

Non-Compete Agreements: Provide Them Ahead of Time – But Don’t Let Them Be Signed

On March 8, 2022, the Fifth Circuit Court of Appeals held that a non-compete agreement was not enforceable because the employer seeking to enforce the agreement had presented it to the employee, and the employee had signed it, before the employee’s first day of work.  A few months later, Colorado Governor Jared Polis signed into law a new statute requiring that notice of a non-compete agreement be provided to prospective employees before they accept an offer of employment.

In finding a non-compete provision must strictly comply with Louisiana law, the court in Rouses Enterprises, L.L.C. v. Clapp, No. 21-30293 (5th Cir. Mar. 8, 2022), found that Louisiana law (LA. REV. STAT. ANN. § 23:921(A)(1)) permits certain non-compete agreements between employers and employees, but not between job applicants and potential employers.  Thus, the court reasoned, a non-compete agreement signed by a prospective employee before her actual date of hire was unenforceable.

Continue reading “Non-Compete Agreements: Provide Them Ahead of Time – But Don’t Let Them Be Signed”

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.

Continue reading “Coming August 2022: Colorado Substantially Limits Noncompete Agreements”

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.

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