Trade Secrets & Employee Mobility

Will treating an individual as an employee rather than an independent contractor - when the parties have agreed to an independent contractor arrangement - preclude enforcement of a non-compete agreement? The Third Circuit Court of Appeals recently answered this question affirmatively, affirming a District Court Order denying an employer's application for a preliminary injunction.

For noncompete and trade secret lawyers in the healthcare industry, the recent Michigan Court of Appeals case of Isidore Steiner, DPM v. Bonanni highlights the importance of understanding applicable state privacy laws as well as the federal Health Insurance Portability and Accountability Act (HIPAA).

Please join the attorneys of EpsteinBeckerGreen on June 7, 2011, at the National Press Club, as we present eight panels covering labor and employment topics that have increasingly impacted employers in the health care industry. 

Our first panel, entitled Significant Labor and Employment Issues that Affect Health Entities, will include representatives from the health care industry, such as a hospitals, skilled nursing facilities, and emergency medical services. These executive panelists will discuss the critical labor and employment issues they are currently experiencing ...

In an interesting recent decision, the Supreme Court of Arkansas refused to enforce a non-compete in a lease agreement -- which clearly had been violated -- because it did not arise out of a contract of employment or contract for the transfer of goodwill or property.

A recent decision by the Indiana Court of Appeals prolongs a non-compete lawsuit that already has been pending for nine years.

Last year, the Gonzaga Law Review published an exhaustive study of federal court trade secret litigation. This week, it published a companion study of state appellate court decisions involving trade secrets during the period between 1995 and 2009.

In December 2010, in Reliable Fire Equipment Company v. Arredondo, the Illinois Court of Appeals for the Second District directly addressed Sunbelt Rentals, Inc. v. Ehlers, a troublesome 2009 case from Illinois' Fourth District that rejected Illinois' longstanding requirement that an employer must have a legitimate business interest in order to enforce a non-compete agreement. According to the Court in Reliable Fire, restraints on trade have long been disfavored by the Courts and the "legitimate business interest test" remains an important "threshold question" which allows the Court to analyze "whether the employer has an interest other than suppression of ordinary competition." Thus, depending on the district in which they are located, Illinois employers may be subject to different standards for enforcement of non-compete agreements.

Last year, a bill that sought to codify Massachusetts' non-competition law died in Committee in that state's Legislature. A new bill on the same subject has now been introduced in the Massachusetts Legislature, and it clarifies and modifies the old bill, mostly in an attempt to satisfy businesses that found portions of the bill unacceptable. As modified, the new bill appears to have a good chance of passing this coming spring.

A federal district court in Alabama denied a request for a preliminary injunction from clothing manufacturers Fruit of the Loom, Inc. and Russell Brands, LLC, seeking to prohibit a former employee, on the basis of a non-compete agreement, from continuing to work for a competitor at which he had been employed for two months.

The proposed "Illinois Covenants Not To Compete Act" was re-introduced on January 12, 2011 in the same form as it was introduced last year. This bill has not attracted significant public attention or commentary, but we will monitor it and report on significant developments.