Posts tagged Non-Solicit Agreements.
Blogs
Clock 2 minute read

Last summer, as discussed in this blog, the Georgia Court of Appeals issued a decision in N. Amer. Senior Benefits, LLC v. Wimmer that presented potential challenges for employers seeking to enforce employee non-solicitation provisions.  That case held, pursuant to Georgia’s Restrictive Covenants Act, OCGA § 13-8-50 et seq., that a restrictive covenant extending beyond the end of an individual’s employment, and undertaking to prohibit the individual from soliciting former coworkers, is unenforceable if it lacks an explicit geographic limitation. 

In a September 4, 2024 Opinion, the Georgia Supreme Court overruled that decision.  The relevant statutory provision in both cases is OCGA § 13-8-53(a), which permits enforcement of restrictive covenants “so long as such restrictions are reasonable in time, geographic area, and scope of prohibited activities.”  The Supreme Court held that “nothing in the text of subsection (a) mandates that a restrictive covenant contain an explicit geographic term, nor does subsection (a) prohibit a covenant’s geographic area from being expressed in implied terms.”

The Supreme Court continued: “In short, the plain text of subsection (a) requires with respect to geographic restrictions on competition that any such restriction be reasonable, regardless of whether the restriction is expressly stated or implied.”  The Court also noted that its reading of OCGA § 13-8-53(a) comports with the Restrictive Covenants Act’s “more permissive and flexible approach to restrictive covenants.” 

Blogs
Clock 3 minute read

When the calendar turns to July 2024, staffing agencies, home health agencies and other service providers operating in Minnesota are going to experience a considerable change in the legal landscape of that state, which could affect their motivation to continue doing business there. 

On July 1, 2024, a new Minnesota law (MN SF 3852) goes into effect, prohibiting any service provider (defined as a business “acting directly or indirectly as an employer or manager for work contracted or requested by a customer”), from restricting, restraining or prohibiting in any way that customer from directly or indirectly soliciting or hiring an employee of the service provider.  

Blogs
Clock 2 minute read

For many of us, summer holidays are over, the kids are back in school, and it is a good time to take stock of languishing items on our to-do lists.  For employers that have restrictive covenant agreements with employees in Georgia, one of those to-do items should be to review the employee non-solicitation provisions in their employment agreements.

Earlier this summer, in North American Senior Benefits v. Wimmer, the Georgia Court of Appeals issued a decision that likely will make it substantially more challenging for employers to enforce employee non-solicitation provisions.  That ...

Blogs
Clock 2 minute read

For the last decade, one of the biggest issues in Illinois noncompete law has been what constitutes adequate consideration for a post-employment restrictive covenant, apart from employment lasting at least two years after the agreement was signed.  The “24 month rule” set forth in Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327 has caused much head-scratching, and the Illinois legislature essentially punted on the issue in the recent amendments to the Illinois Freedom to Work Act, 820 ILCS 90/1, et seq. (effective as of January 1, 2022).  (Full disclosure: One of the authors of this post advised the Illinois Chamber of Commerce in its negotiations with the State legislature over this law and, hence, can speak from personal experience on the legislative history of this “punt.”)

Blogs
Clock 3 minute read

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.

Blogs
Clock 3 minute read

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. 

Blogs
Clock less than a minute

The Federal Trade Commission (FTC) has announced that it will be hosting a public forum on February 16, 2022, from 12:00-3:00 p.m. ET, to discuss its proposed nationwide noncompete ban. The forum is intended to supplement the FTC’s request for written comments, which as of today have exceeded 10,000. According to the FTC, “[t]he commission will hear from a series of speakers who have been subjected to noncompete restrictions, as well as business owners who have experience with noncompetes.” It is unclear whether any of the “business owners who have experience with ...

Blogs
Clock 5 minute read

It is no secret that the Department of Justice (DOJ) has been largely unsuccessful in the criminal no poach cases it has brought to trial to date. Its most public loss came with the acquittals earlier this year of DaVita, a dialysis company, and certain of its executives in the District of Colorado. DOJ also lost at trial in another high-profile case in the Eastern District of Texas involving a physical therapy staffing company (although it secured a conviction against a company executive for obstruction of justice). But DOJ has pressed on, claiming victories at the motion to dismiss stage. Indeed, following its recent trial losses, Assistant Attorney General Jonathan Kanter, who leads the DOJ’s antitrust division, had this to say:

Blogs
Clock 5 minute read

As we previously reported, the Colorado General Assembly passed a bill in May making substantial amendments to Colorado’s noncompete statute, C.R.S. § 8-2-113. Governor Jared Polis signed the bill on June 8, 2022, meaning the amendments will go into effect at 12:01 a.m. on August 10, 2022, which is only four weeks away. That may sound like a long time, but it will go by quickly.

Blogs
Clock 4 minute read

When Massachusetts enacted the Massachusetts Noncompetition Agreement Act (“MNCA”) in mid-2018, some commentators suggested that the statute reflected an anti-employer tilt in public policy. But, we advised  that sophisticated employers advised by knowledgeable counsel could navigate the restrictions set forth in the MNCA.  As reported here, the May 2019 decision from the District of Massachusetts in Nuvasive Inc. v. Day and Richard, 19-cv-10800 (D. Mass. May 29, 2019) (Nuvasive I) supported our initial reading of the MNCA.   The First Circuit’s April 8, 2020 decision in ...

Blogs
Clock 4 minute read

A recent decision in Edward D. Jones & Co., LP v. John Kerr (S.D.In. 19-cv-03810 Nov. 14, 2019), illustrates the unique challenges that broker-dealers may face when enforcing post-employment covenants that prohibit former registered representatives (“RRs”) from soliciting clients. Edward Jones sued Kerr, a former RR, to enforce an employment contract that required him to return confidential information upon termination and prohibited him from “directly or indirectly” soliciting any Edward Jones’ client for a period of one year.  Although Kerr did not challenge the ...

Blogs
Clock less than a minute

A recently passed Florida law, Florida Statutes 542.336 seeks to prevent medical providers from using restrictive covenants to monopolize medical specialties in rural counties.  The law bars the enforcement of “restrictive covenants” against physicians who practice “a medical specialty in a county wherein one entity employs or contracts with, either directly or through related or affiliated entities, all physicians who practice such specialty in that county.”  Once a second provider enters the market for a particular specialty in a county, restrictive covenants ...

Blogs
Clock 4 minute read

Many physicians and other health care workers are familiar with restrictive covenants like non-competition and/or non-solicitation agreements, either as employees who have been asked to sign such covenants as a condition of their employment or as business owners seeking to enforce such covenants to protect their medical practices from competition. These covenants are usually designed to prohibit physicians or other practitioners from leaving and setting up a competing practice nearby using patient contacts, information, and/or training that they received during their ...

Blogs
Clock less than a minute

In this age of social media, a frequently asked question is whether social media activity can violate a non-compete or non-solicit.   Although the case law is evolving, courts which have addressed the issue have focused on the content of the communication, rather than the medium used to convey it.  In so doing, they have distinguished between mere passive social media activity (e.g., posting an update about a new job) as opposed to more targeted, active actions (e.g., not merely posting about a new job, but also actively recruiting former co-workers or clients).

A “LinkedIn” case ...

Blogs
Clock 12 minute read

Whether you are a young child missing teeth, or a grown-up taking account of her life, or Santa Claus himself checking up on everyone else’s life, many of us make lists at holiday time.  They can be lists of gifts we want, or those we need to get, or people we wish to see or write to, or things we need or want to do before the end of the year.  Sometimes they are just lists of things that happened this year or that we want to happen next year.  Certainly there are lots of “Top Ten” holiday lists.  This one may be neither an exception nor exceptional, but here is a “Top Ten List of Holiday-Related Trade ...

Blogs
Clock less than a minute

Featured in the top story on Employment Law This Week:  Former employees turned competitors in Pennsylvania are hit with $4.5 million in punitive damages.

An insurance brokerage firm sued a group of employees, claiming that they violated their non-solicitation agreements by luring away employees and clients to launch a new office for a competitor. A lower court awarded the firm nearly $2.4 million in compensatory damages and $4.5 million in punitive damages because of the defendants’ outrageous conduct. On appeal, the appellate court agreed and upheld all damages.

See the ...

Blogs
Clock less than a minute

[caption id="attachment_2072" align="alignright" width="113"] Zachary C. Jackson[/caption]

The United States District Court for the Northern District of Indiana (Hammond Division) recently ruled on cross motions for summary judgment in the case of E.T. Products, LLC v. D.E. Miller Holdings, Inc. (Case No. 2:13cv424-PPS).  The dispute in that case stemmed from the acquisition of a portion of a company.  Essentially, the purchaser claimed that the seller was violating the restrictive covenant prohibiting him from soliciting the purchaser’s customers, and the seller ...

Blogs
Clock less than a minute

One of the top stories on Employment Law This Week – Epstein Becker Green’s new video program – is about a bad leaver and the hefty price he had to pay.

A former VP of Fortinet, Inc., must pay nearly $1.7 million to the company, after poaching three of his subordinates when he left his job for a competitor. The former VP joked in an email that the employees he took with him were “three bullets to the back of the head” of his former employer. In the arbitration, a former California state judge ruled that the employee had breached his fiduciary duty and his contractual obligations not to ...

Blogs
Clock 2 minute read

A former California State judge in an arbitration awarded nearly $1.7 million to an employer against its former employee based primarily on his acts taken going out the door.  His joking email with a co-worker after recruiting three others, characterizing their resignations as “Three bullets to the back of the head” of his employer, was clearly shooting himself in the foot in the eyes of the arbitrator.  The Award is interesting for many reasons - - the interplay between fiduciary duties and non-solicitation of employees provisions, the allowable damages when such a fiduciary duty ...

Blogs
Clock 4 minute read

In a decision issued in late October, AssuredPartners, Inc. et al. v. William Schmitt, 2015 IL  App. (1st) 141863 (Ill. App. 2015),  the Illinois Appellate Court struck down as overbroad and unreasonable, the noncompete, nonsolicit and confidentiality provisions in an employment agreement.  The Court then refused to judicially modify or “blue pencil” these provisions because the Court deemed their deficiencies “too great to permit modification.”  This decision is essentially a primer on current Illinois law regarding restrictive covenants and confidentiality ...

Blogs
Clock 2 minute read

The United States Court of Appeals for the Fifth Circuit opened its October 29th opinion in Cardoni v. Prosperity Bank by noting that “[i]n addition to their well-known disagreements over boundaries and football” known as the Red River Rivalry, “Texas and Oklahoma do not see eye to eye on a less prominent issue: covenants not to compete.”   As the Court went on to note, “Texas generally allows them so long as they are limited both geographically and temporally… Oklahoma generally does not.”  “These different policy choices—Texas's view which prioritizes parties ...

Blogs
Clock less than a minute

Alabama has a new restrictive covenant statute.  A few weeks ago, Alabama Governor Bentley signed new legislation which will repeal the 1975 version of Alabama Code Section 8-1-1 titled “Contracts restraining business void; exceptions” and replace it with a new version effective January 1, 2016.

The new law stakes out the permissible scope and purpose of restrictive covenants such as non-compete and non-solicitation agreements.  Unlike some other states with restrictive covenant statutes, Alabama’s new law codifies a middle-of-the-road approach to restrictive ...

Blogs
Clock less than a minute

When recruiting an executive, or when being recruited, it is best practice for the future employer, the employee and any executive recruiting firm involved in the placement to address head-on the existence of any restrictive covenant limiting the future activities of the employee. The New York State Supreme Court - First Department Appellate Division - yesterday upheld a claim that by not clearly disclosing the existence of a non-solicitation restriction in an executive recruit’s employment agreement, the head hunter involved in the placement could potentially be held liable ...

Blogs
Clock 5 minute read
When an employee leaves his or her employment in California, under what circumstances may a former employee solicit his former employer's customers? Can non-solicitation agreements ever be enforceable under California law?
Blogs
Clock 2 minute read
The high profile lawsuit filed on February 11, 2014 by Anschutz Entertainment Group against Shervin Mirhashemi and his new employer, Legends Hospitality, LLC, again raises the question of when a California Court of Appeal will decide whether employee non-solicits are enforceable in California.
Blogs
Clock 3 minute read
A recent decision from the United States District Court for the Southern District of New York, Reed Elsevier Inc. v. Transitions Holding Co., Inc., provides a useful overview of New York law on restrictive covenants.
Blogs
Clock 3 minute read
A recent case stands as a reminder that there may be liability for writing an "overly zealous" - - and potentially inaccurate - - cease and desist letter.
Blogs
Clock 2 minute read
Lawyers and clients alike often believe that it is easier to enforce a non-solicitation agreement than a non-competition agreement. Sometimes, that's true. However, that does not mean that companies can do so without demonstrating a legitimate business interest in the enforcement of that non-solicitation agreement.
Blogs
Clock 3 minute read
Does the recent spate of antitrust challenges to no-hire agreements mean that negotiated no-hire provisions, which are commonly found in settlement agreements and commercial contracts, face an increased risk of being held unenforceable or, even worse, giving rise to a claim for damages?
Blogs
Clock less than a minute
Peter Steinmeyer, a Member of the Firm in the Labor and Employment practice and Managing Shareholder of the Chicago office, was quoted in an article in Law360.com titled "5 Tips for Drafting Employment Pacts in the Social Media Era."
Blogs
Clock 2 minute read
In a new case filed by Charles Schwab & Co. Inc. against former employees who staggered their departures to a competitor, we have a prime example of the risks involved when a team departs over time versus simultaneously.
Blogs
Clock 4 minute read
In the latest salvo in a long-running legal dispute stemming from a classic raid by a competitor upon a commercial insurance broker's business and employees, a New York appellate court has refused to dismiss a New York lawsuit in favor of a prior-filed California lawsuit which has already addressed many of the same issues.
Blogs
Clock 4 minute read
Although the California courts have steadily eroded employers' ability to contractually limit their former employees' solicitation of their customers, a recent decision held that a stipulated injunction limiting solicitation can still be enforced.
Blogs
Clock less than a minute
Continuing class action litigation against Google and Intuit arising from agreements between those and other companies to refrain from hiring each other's highly skilled technical employees -- which agreements previously were the subject of a Department of Justice complaint asserting antitrust violations -- serves to remind employers to carefully consider the costs and benefits of any no-hire agreements.
Blogs
Clock less than a minute
Over a dozen years after the New York Court of Appeals specifically recognized, in BDO Seidman v. Hirshberg, that an employer may have a legitimate and protectable business interest in preventing former employees from exploiting or appropriating the relationships and goodwill of its customers which had been created and maintained at the employer's expense, some New York courts still appear to be reluctant to uphold contractual provisions in employment agreements that are designed simply to protect customer goodwill.
Blogs
Clock 2 minute read
In a recent New York case, a commercial insurance broker whose business and employees had been raided on a substantial scale by a former employee and competitor was awarded a preliminary injunction barring the former employee, the competing company, and certain other former employees from soliciting business from the broker's clients, and from soliciting other employees of the broker to join the competitor. The Court's finding of irreparable harm was premised on reputational harm and loss of confidence in the marketplace suffered by the broker due to the perception that the broker was badly "wounded" by the extent of the raid.
Blogs
Clock 2 minute read
In a recent decision in the matter Alliance Bernstein, L.P. v. William Clements, the Supreme Court of the State of New York, New York County (Justice Louis B. York), enjoined a former employee of AllianceBernstein, L.P. ("AllianceBernstein") from working for a competitor for 60 days, pursuant to a provision in an agreement requiring the individual to provide 60 days notice of his intention to resign. Although the original 60 days extending from the date of his resignation had already elapsed, the Court in effect granted a new 60 day period of non-competition, because the individual had started working for the competitor immediately upon his resignation from AllianceBernstein.
Blogs
Clock less than a minute
In an article published in the December 22, 2010 New York Law Journal (entitled "Nonhire Agreements as Antitrust Violations"), we discuss a complaint and proposed settlement filed in September 2010 by the Department of Justice against several well-known technology companies, which alleges that those companies entered into various bilateral agreements in which they agreed not to actively solicit each other's highly skilled technical employees, and that those agreements violated Section 1 of the Sherman Act, 15 U.S.C. § 1. The DOJ filed a similar suit on December 21, 2010 against another well-known company. Accordingly, companies who have entered or are considering entering into such agreements should review their practices to avoid unwanted attention from governmental authorities.
Blogs
Clock 2 minute read
We previously wrote concerning a May 22, 2009 temporary restraining order granted by the U.S. District Court for the Southern District of Ohio against three former employees of UBS Financial Services Inc. ("UBS"), in effect pending an arbitration hearing before the Financial Industry Regulatory Authority ("FINRA"). On June 3, 2009, UBS successfully moved the District Court to expand the TRO and for a preliminary injunction on the basis of additional evidence. The expanded TRO shows that even a plaintiff who has secured temporary injunctive relief from a court need not wait for a scheduled FINRA injunctive hearing if its business interests continue to be threatened in the interim.
Blogs
Clock less than a minute
A recent article in Lawyer USA discusses how litigation over noncompetition and nonsolicitation agreements has been on the rise in recent years.
Blogs
Clock 3 minute read
A dispute between UBS Financial Services Inc. ("UBS") and three of its former brokers highlights various issues involving trade secrets and non-solicitation covenants in the financial services industry. On May 22, 2009, on UBS's motion in UBS Financial Services Inc. v. Lofton, Case No. 1:09 CV 367, the U.S. District Court for the Southern District of Ohio entered a preliminary injunction prohibiting the three individuals from soliciting any securities investment business from UBS customers pending an arbitration hearing before the Financial Industry Regulatory Authority ("FINRA").

Search This Blog

Blog Editors

Recent Updates

Related Services

Topics

Archives

Jump to Page

Subscribe

Sign up to receive an email notification when new Trade Secrets & Employee Mobility posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.