Employee Mobility and Restrictive Covenants - Page 8 of 13

With Pennsylvania Non-Competes, As in Life, Timing is Everything

In Pennsylvania, it has long been known that waiting until after the start of employment to have an employee sign a non-competition agreement comes with the real risk that the agreement will be unenforceable for lack of consideration. Last week, the Pennsylvania Supreme Court provided definitive guidance on the issue in Rullex Co., LLC v. Tel-Stream, Inc., et al., holding that a non-competition agreement entered into after an employee commences employment fails for lack of consideration unless the essential provisions of those restrictions were agreed to before the employee started work.

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Top Four Considerations for Employers Seeking to Enforce Restrictive Covenants During a Global Pandemic

The global coronavirus pandemic has had a multitude of effects on how employers conduct business and manage their workforces. But as employees start to return to work, employers must be mindful of how to address those who leave and potentially violate their noncompetition agreements. As we settle into the “new normal,” the Restrictive Covenant team with Faegre Drinker’s Labor & Employment group has identified four considerations for employers seeking to enforce restrictive covenants and protect trade secrets.

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Delaware Chancery Court Declines to Blue-Pencil Overly Broad Noncompete Agreement; Casts Doubt on Choice of Law Provisions

A recent Delaware Chancery Court opinion has elucidated Delaware’s approach to judicially modifying, or “blue-penciling,” overly broad noncompete agreements and deferring to parties’ choice of law provisions. The case, FP UC Holdings, LLC, et al. v. James W. Hamilton, Jr., et al., C.A. No. 2019-1029-JRS (Del Ch. Mar. 27, 2020), highlights the importance of drafting well-tailored restrictive covenants, and shows that even in Delaware – where employers often have been reassured by the safe harbor of courts’ relative willingness to blue-pencil problematic agreements and apply Delaware law to fact patterns that have developed in other states – employers must make careful drafting and choice of law decisions. It also emphasizes that if an employer’s intent is to litigate in Delaware, the employer should do so from the beginning, without acquiescing to another court’s jurisdiction.

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Part 25 of “The Restricting Covenant” Series: Disintermediation and Noncompetes

The most recent installment of the Restricting Covenant Series was inspired by the Jeopardy! tournament “The Greatest of All Time,” where champion Ken Jennings edged out two other competitors to win the million-dollar prize. So, for the crossword and quiz show enthusiasts, here is the clue in the form of an answer (and the subject of this article): This 17-letter word means to cut out the middleman in connection with a transaction. Correct response: What is “disintermediation”? What does disintermediation have to do with noncompete agreements? Read on.

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Confidentiality and Nondisclosure Agreements (California)

Los Angeles partner Mark Terman and associates Sujata Wiese and Shamar Toms-Anthony updated their article in Practical Law titled “Confidentiality and Nondisclosure Agreements (CA).” In their article, Mark, Sujata and Shamar 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.

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Part 24 of “The Restricting Covenant” Series: Choice of Law and Covenants Not to Compete

There are many notable east coast-west coast rivalries. In sports (Celtics versus Lakers basketball), in leisure (Atlantic versus Pacific beaches), or in food (Shake Shack versus In-N-Out Burger), to name a few. With respect to restrictive covenants, the conflict between Delaware, which is generally considered a “pro-enforcement” jurisdiction, and California, which is generally considered an “anti-enforcement” jurisdiction, definitely stands out in the crowd. This installment of the Restricting Covenant Series looks at the competing views of the Golden State and The First State’s on the enforceability of restrictive covenants, and the critical importance of conducting a “choice of law” analysis to settle this feud.

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