Employee Mobility and Restrictive Covenants - Page 9 of 16

Supreme Court Limits Application of the Computer Fraud and Abuse Act Against Employees Who Abuse Their Network Access Credentials

In a decision handed down yesterday, the Supreme Court held that civil liability under the Computer Fraud and Abuse Act (“CFAA”) does not attach for employees who abuse or misuse their access credentials in accessing their current or former employers’ computer networks. Rather, to be liable under the CFAA, the employees must access databases or other electronic materials that are outside of their access rights and otherwise off-limits to them.

The Case

The case, Van Buren v. United States, arose out of the actions of a former police sergeant. The former officer, Van Buren, used his valid login credentials to search his police department database for a particular license plate number in exchange for a bribe, but was caught by an FBI sting operation. Van Buren was charged with a felony violation of the CFAA—18 U.S.C. § 1030(a)(2). An individual is liable under this section (which can carry both civil and criminal penalties) if he “intentionally accesses a computer without authorization or exceeds authorized access.” The statute defines “exceeds authorized access” to mean “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. § 1030(e)(6).

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The Pennsylvania Supreme Court Strikes Down a No-Hire Agreement as an Unreasonable Restraint on Trade

Recently, in Pittsburgh Logistics Systems, Inc. v. Beemac Trucking, LLC, No. 31 WAP 2019, — A.3d –, 2021 WL 1676399 (Apr. 29, 2021), the Pennsylvania Supreme Court found that a no-hire provision that was ancillary to a services contract between two businesses was an unreasonable restraint on trade and was therefore not enforceable. In ruling on this matter of first impression, the Court identified several important factors that employers should consider before entering into a no-hire provision that places restrictions on the movement of their employees.

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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.

Top 3 Employee Mobility and Restrictive Covenant Issues to Watch For in 2021

With 2020 finally in our rearview mirror, we can begin to look ahead to a promising and prosperous 2021. As the cloud of COVID-19 starts to lift (thanks to several vaccines), we expect employers will slowly begin to reopen their offices, employees will travel more, and the job market may revert back to the low unemployment levels that predated the onset of COVID-19 in March 2020. The ever-changing landscape of restrictive covenants certainly could affect all of this employment-related activity, including non-competes and non-solicits. Here are our early predictions for the Top 3 hot-button issues to look out for in the coming year.

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Ixchel Pharma, LLC v. Biogen, Inc.: Opening the Door to Non-Compete Agreements Between Businesses in California

In a recent decision, Ixchel Pharma, LLC v. Biogen, Inc.,[1] the Supreme Court of California opened the door for some restrictive covenants between commercial enterprises, but it left alone California law generally prohibiting post-employment restrictive covenants with employees.
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Part 27 of the “The Restricting Covenant Series”: Disgorgement

Most of the action in restrictive covenant cases occurs in the beginning of the litigation at the temporary or preliminary injunction stage when a company seeks to stop someone from doing something immediately. However, after the dust settles and the case moves forward to discovery and trial, money damages often take center stage. There are different types of monetary relief that might be available to a company that is harmed by a former employee’s unlawful competitive conduct – compensatory, liquidated, equitable, or punitive, to name a few. This edition of The Restricting Covenant Series discusses a potentially potent form of equitable monetary relief in restrictive covenant and duty of loyalty cases – disgorgement of an employee’s compensation based on that employee’s competitive and disloyal conduct.
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