Trade Secrets & Employee Mobility

Colorado statutory law has traditionally limited enforcement of restrictive covenants.  C.R.S. § 8-2-113, entitled “Unlawful to intimidate worker – agreement not to compete,” provides that all contractual restrictions on a person’s post-employment competitive activity are “void” unless they fit into one of four categories: (1) contracts for the purchase and sale of a business or the assets of a business; (2) contracts for the protection of trade secrets; (3) contracts providing for recovery of expenses of educating and training an employee who have served an employer less than two years; and (4) agreements with executives, management personnel, and their professional staff.  This statute applies not only to non-compete agreements, but also to agreements not to solicit customers or employees.  Most companies trying to defend their restrictive covenants do so under the exception to protect trade secrets or the exception for executives/managers/professional staff.

Thomson Reuters Practical Law has released the 2022 update to “Trade Secrets Litigation,” co-authored by our colleague Peter A. Steinmeyer.

Within the last year, the U.S. Department of Justice (DOJ) brought its first indictments alleging criminal wage-fixing conspiracies and criminal no-poach conspiracies among competing employers.  In December 2020, DOJ indicted the president of a staffing company for violating Section 1 of the Sherman Act by allegedly conspiring with competitors to fix wages paid to physical therapists.  A month later, DOJ indicted a corporation for violating the Section 1 of the Sherman Act because it allegedly entered into “naked no-poach agreements,” pursuant to which it agreed not to solicit senior employees of two competitors   In March 2021, DOJ filed its second wage-fixing indictment, which also alleged a conspiracy to allocate workers.  As reported here and here, these indictments were the culmination of the DOJ’s Policy, contained in its 2016 Antitrust Guidance for Human Resource Professionals (“Antitrust Guidance”) to bring criminal charges against employers who conspired to suppress wages, either through wage-fixing agreements or naked no-poach agreements.

Thomson Reuters Practical Law has released the 2021 update to “Garden Leave Provisions in Employment Agreements,” co-authored by our colleagues Peter A. Steinmeyer and Lauri F. Rasnick.

This Practice Note discusses garden leave provisions in employment agreements as an alternative or a companion to traditional employee non-compete agreements. It addresses the differences between garden leave and non-compete provisions, the benefits and drawbacks of garden leave, and drafting considerations for employers that want to use garden leave provisions. This Note applies to private employers and is jurisdiction neutral.

Thomson Reuters Practical Law has released the 2021 update to “Non-Compete Laws: Massachusetts,” a Q&A guide to non-compete agreements between employers and employees for private employers in Massachusetts, authored by our colleague David J. Clark.

This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local, or municipal law may impose additional or different requirements.

Thomson Reuters Practical Law has released the 2021 update to “Non-Compete Laws: Illinois,” a Q&A guide to non-compete agreements between employers and employees, co-authored by our colleagues Peter A. Steinmeyer and David J. Clark.

This Q&A addresses enforcement and drafting considerations for restrictive covenants such as post-employment covenants not to compete and non-solicitation of customers and employees. Federal, local, or municipal law may impose additional or different requirements.

Effective January 1, 2022, the earning thresholds for employees and independent contractors in Washington who properly may be subject to noncompetition covenants will increase. The new adjusted earning threshold for employees will be $107,301.04 and the new adjusted earning threshold for independent contractors will be $268,252.59. Earnings is defined as the compensation reflected on box one of the form W-2 for employees or the payments reported on a form 1099 for independent contractors. Therefore, workers who earn amounts less than the new thresholds may not be subject to noncompetition covenants.

Our colleagues Nathaniel Glasser, Brian Steinbach, Maxine Adams, and Eric Emanuelson Jr. of Epstein Becker Green have a new post on Workforce Bulletin that will be of interest to our readers: "Washington, D.C. Postpones Ban on Non-Competes."

The following is an excerpt:

Washington, D.C. employers have more time to get their non-compete ducks in a row. On August 23, 2021, Mayor Bowser signed the Fiscal Year 2022 Budget Support Act of 2021 (B24-0373) (the “Support Act”), which includes various statutory changes necessary to implement the D.C. FY 2022 budget. As expected ...

As featured in #WorkforceWednesday:  This week, we look at the restriction and legislation of non-compete agreements.

The Future of Non-Compete Agreements

The restriction and legislation of non-compete agreements is gaining traction around the country, with states and the federal government passing or proposing new restrictions on the clauses. In July, President Biden signed an executive order that discussed the regulation of non-compete agreements, which in the past has only been the province of the states. Attorneys Pete Steinmeyer and Brian Spang discuss how the ...

On July 9, 2021, President Biden signed the Executive Order on Promoting Competition in the American Economy, which encourages the Federal Trade Commission (“FTC”) to employ its statutory rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”  Executive Order, Section 5(g).  While the language in the Executive Order refers to the “unfair” use of non-compete clauses, the Administration’s explanatory statement makes clear that “the President encourages the FTC to ban or ...