As expected, on May 24, 2023, Governor Tim Walz signed a new law banning noncompete agreements in Minnesota. The ban will be effective for such agreements entered on or after July 1, 2023.
By enacting the Omnibus Jobs, Economic Development, Labor and Industry appropriations bill (MN SF 30035), Minnesota becomes only the fourth state (along with California, Oklahoma and North Dakota) to ban noncompetes.
The day after obtaining federal brokerage authority for the logistics company he formed a month earlier, Christopher Johnson, a North Carolina resident, resigned from his employment with Cincinnati-based Total Quality Logistics, LLC (“TQL”). TQL then sued Johnson and his company Patriot Logistics (“Patriot”) in the Clermont County Court of Common Pleas, alleging Johnson breached his employment agreement and misappropriated trade secrets in forming Patriot while still employed by TQL.
Johnson and Patriot removed the case to federal district court based on diversity jurisdiction. TQL moved to remand the case back to state court, arguing the $75,000 amount in controversy requirement was not met. After the federal court denied TQL’s remand motion, TQL voluntarily dismissed the case and refiled in state court. Johnson and Patriot removed the case yet again.
According to Bloomberg, The Federal Trade Commission (“FTC”) is not expected to vote on the final version of a new rule that would ban noncompete clauses in employment contracts until April 2024. The rule defines a “non-compete clause” as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.”
As we previously reported, the proposed rule would ban employers from imposing noncompete agreements on their employees. The rule would also require employers to rescind all preexisting noncompete agreements and to notify all employees who had been subject to a noncompete agreement of the recission. Although the proposed rule would not prohibit other kinds of employment restrictions, such as nondisclosure agreements, certain restrictions that are overbroad could be subject to the new rule. For example, a non-disclosure agreement between an employer and an employee that is written so broadly that it effectively precludes the employee from working in the same field would be considered a “de facto” noncompete clause.
Continue Reading Final FTC Rule on Non-Competes Not Expected Before April 2024
Earlier this year, the United States Department of Justice (“DOJ”) announced that it was launching the Disruptive Technology Strike Force (“Strike Force”) in an effort “to target illicit actors, strengthen supply chains and protect critical technological assets from being acquired or used by nation-state adversaries.” The DOJ’s initial announcement can be found here. The Strike Force is co-led by the DOJ and Commerce Department with the goal of countering efforts by hostile nation-states seeking to illegally acquire sensitive United States technology. On May 16, 2023, the DOJ announced criminal charges in five cases from five different U.S. Attorney’s Offices in connection with the Strike Force’s efforts. Two of the cases involve allegations of trade secret theft from U.S. technology companies with the intent to market the technology in foreign countries.
Now on Spilling Secrets, our podcast series on the future of non-compete and trade secrets law:
Human capital often drives the value of merger and acquisition (M&A) deals in the health care industry. Buyers involved in these deals must retain key employees to secure that value.
Epstein Becker Green’s Spilling Secrets hosts Erik W. Weibust and Katherine G. Rigby join forces with the Diagnosing Health Care podcast hosts Daniel L. Fahey and Timothy J. Murphy to talk about strategies to retain these employees.
A Ruling and Order issued on April 28, 2023 by the U.S. District Court for the District of Connecticut in United States v. Patel, et al. ran the government’s losing streak to four failed trials seeking to criminally prosecute alleged wage-fixing and no-poach agreements.
To review, in 2016 the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued Antitrust Guidance for Human Resources Professionals that warned of potential criminal prosecution for so-called “naked” no-poach agreements, i.e., agreements among competing businesses to restrict hiring or compensation of employees, untethered to any legitimate collaborative relationship.
Epstein Becker Green (EBG) is pleased to announce the launch of our 50-State Noncompete Survey, designed to give employers a desktop guide to the great variety and specificity of noncompete laws across the United States.
EBG’s 50-State Noncompete Survey is here to help provide key insights on all of the following areas of noncompete law in your state:
Continue Reading Epstein Becker Green Launches 50-State Noncompete Survey for Employers
It is no secret that political winds are blowing against the practice of employers requiring certain employees to sign non-competition agreements, as demonstrated most saliently earlier this year when the Federal Trade Commission (“FTC”) introduced its proposed rule that would ban non-competes nationwide, with retroactive effect. While thousands of comments have been submitted to the FTC regarding that proposed rule (and the comment period is scheduled to close this week), legislators in many states have been busy introducing legislation that would ban or limit the use of non-competes.
Continue Reading Minnesota Takes Step Toward Banning Non-Competes
Now on Spilling Secrets, our podcast series on the future of non-compete and trade secrets law:
On January 5, 2023, the Federal Trade Commission (FTC) announced a proposed rule that would ban employers from using non-compete clauses.
Panelists Peter A. Steinmeyer and Erik W. Weibust and featured guest attorney Stuart M. Gerson discuss the proposed rule and next steps for employers.
Continue Reading Spilling Secrets Podcast: FTC Proposes Ban on Non-Competes
FTC Commissioner Christine Wilson, published an Op-Ed in the Wall Street Journal today in which she announced her resignation from the FTC and explained her reasoning. Readers may recall that Commissioner Wilson was the lone dissenting voice on the FTC’s proposed rule banning noncompetes nationwide.