Trade Secrets & Employee Mobility

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?

A recent court decision affirms that companies and their counsel are shielded, pursuant to the absolute privilege protection, from liability for defamation that may arise from the publication of letters to former employees reminding the employees about post-employment contractual obligations to the company.

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."

A United States Magistrate Judge recently held that a plaintiff had a duty to preserve his Facebook account and that his deletion of it warranted an "adverse inference" jury instruction for failing to preserve it.

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.

The Obama Administration's "Strategy on Mitigating the Theft of U.S. Trade Secrets," announced on February 20, 2013, encourages companies and industry associations to participate in efforts to develop and adopt voluntary best practices to protect trade secrets.

Although California has a strong public policy, based on Cal. Bus. & Prof. Code § 16600, against the enforcement of employer/employee non-compete agreements, employers might get some traction in this area by including a choice of venue or forum selection provision in their employment contracts and - through that provision - having the case transferred to a jurisdiction that will be more likely to enforce a restrictive covenant.

An employee who joined a corporate employer that was not a competitor with his former employer was still enjoined and restrained by restrictive covenants he signed with his former employer when his new employer merged with his prior employer's competitor.

Forum selection clauses are common in non-compete agreements, particularly when the employer is multi-state or multi-national. One question that often arises, however, is whether a court will actually require an employee to litigate in a distant jurisdiction with which he had minimal contacts. In a recent case from the Eastern District of Missouri, a federal judge enforced just such a forum selection clause.