Non-competes are going to be harder to enforce in Washington State.  On May 8, 2019, Governor Jay Inslee signed the “Act Relating to Restraints, Including Noncompetition Covenants, on Persons Engaging in Lawful Professions, Trades or Businesses,” which was passed by both houses of the state legislature in April.

The new law will become effective January 1, 2020, and will render unenforceable non-competition provisions signed by employees earning less than $100,000 and independent contractors earning less than $250,000 annually.  Other important provisions of the law are as follows:

  • Any non-competes exceeding 18 months will be considered unreasonable and unenforceable.
  • The law


Continue Reading Washington State’s New Law Limits Enforceability of Noncompetition Agreements

The Illinois Appellate Court recently declined to adopt a bright line rule regarding the enforceability of five year non-competes or three year non-solicits, and instead directed courts to interpret the reasonableness of any such restrictive covenants on a case-by-case basis.

In Pam’s Acad. of Dance/Forte Arts Ctr. v. Marik, 2018 IL App (3d) 170803, the plaintiff dance company sued a former employee for breaching a non-disclosure agreement and restrictive covenant by allegedly opening a dance studio within 25 miles of plaintiff and soliciting students and teachers by means of an “improperly obtained” customer list. Following a split resolution on
Continue Reading Illinois Appellate Court Declines to Adopt Bright Line Rule That a Five Year Non-Compete Or a Three Year Non-Solicit Are Unenforceable Per Se

We non-compete lawyers often rely on an old rule of thumb when analyzing the enforceability of a non-compete: if the restriction is so broad that it would even prohibit an employee from working as a janitor for a competitor, then it is very unlikely to be enforced by a judge. And so when a federal judge expressly endorses such a rule of thumb, the urge to blog about it is simply irresistible.

In Medix Staffing Solutions Inc. v. Daniel Dumrauf, Judge Ellis of the Northern District of Illinois addressed the enforceability of a restrictive covenant which prohibited employment in
Continue Reading “Janitor Problem” Sinks Illinois Non-Compete

It is fairly uncommon for a circuit court to opine on the reasonableness of a restrictive covenant. In Ag Spectrum Co. v. Elder, No. 16-3113, 2017 U.S. App. LEXIS 14128 (8th Cir. Aug. 2, 2017), the Eighth Circuit issued a decision holding that an independent contractor’s non-compete was unreasonable and unenforceable.

Applying Iowa law, the Eighth Circuit explained that reasonableness depends on the circumstances, including consideration of several factors such as: (1) the employee’s closeness to customers; (2) the employee’s peculiar knowledge gained through employment that provides a means to pirate the customer; (3) the amount and sophistication of
Continue Reading Eighth Circuit Finds Independent Contractor’s Non-Compete Unreasonable

It is rare that a trade secret / restrictive covenant lawsuit makes it all the way to trial, much less a jury verdict. The passage of time, accumulating legal expenses, bad facts, and/or the risk of losing at trial all can conspire to sap litigants of the desire to take their cases to the finish line.  Settlements and withdrawals of claims abound.  Sometimes, however, the parties dig in and roll the dice in court, as recently occurred in a case in the Southern District of New York.

On November 29, 2016, after more than 10 days of trial, a jury
Continue Reading Going All the Way: SDNY Jury Awards $14.5 Million in Trade Secrets Lawsuit

Employers seeking to require an existing employee to sign a restrictive covenant should consider current litigation trends surrounding what constitutes “adequate consideration.” Under the traditional rule followed by a majority of states, continued employment, standing alone, is adequate consideration for a restrictive covenant signed by an at-will employee. Several courts, however, have recently reexamined this issue, so employers must be aware of differences among the states as to whether some consideration beyond mere continued at-will employment is required.

Fifield v. Premier Dealer Services, Inc.

For example, the Illinois Appellate Court held in Fifield v. Premier Dealer Services, Inc.,
Continue Reading In Today’s Environment, What Is “Adequate Consideration” for a Restrictive Covenant Signed by an Existing Employee?

Readers of this blog know that long settled understandings regarding what constitutes adequate consideration for a restrictive covenant in Illinois were turned upside down when the First District Appellate Court in Illinois held in Fifield v. Premier Dealer Services Inc., 2013 IL App. (1st) 120327 that, absent other consideration, two years of employment are required for a restrictive covenant to be supported by adequate consideration, regardless of whether the covenant was signed at the outset of employment or after, and regardless of whether the employee quit or was fired.

The Illinois Supreme Court declined to hear Fifield,
Continue Reading Another Federal District Court Judge In Illinois Refuses To Apply The Illinois Appellate Court’s Fifield Decision

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
Continue Reading Restrictive Covenant Binds Bad Leaver – Employment Law This Week

A couple years ago, the Illinois First District Appellate Court decided the case of Fifield v. Premier Dealer Services, 2013 IL App. 120327.  There, the Court held that, absent other consideration, two years of employment are required to constitute adequate consideration for a restrictive covenant, regardless of whether the covenant was signed at the outset of employment or after, and regardless of whether the employee quit or was fired.  Since then, some Judges in the United States District Court for the Northern District of Illinois have applied Fifield, and others have declined to do so.

Earlier this
Continue Reading Is Fifield’s holding holding?

On November 2, 2010, by a margin of more than two-to-one, Georgia voters ratified a Constitutional amendment which effectuated the total restructuring of Georgia’s restrictive covenant law. Thus, upon certification of the election results, Georgia will have a new restrictive covenant law, which will apply on a going-forward basis to all contracts entered into on and after such effective date.
Continue Reading Georgia Enacts New Restrictive Covenant Law and Empowers Judges to “Blue-Pencil”