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Someone Call A Doctor! This Settlement Agreement Is Bleeding Out

A federal appeals court recently ruled that an overbroad “no-rehire” provision in a settlement agreement with a former employee can be an unlawful restraint of trade under California law. In Golden v. California Emergency Physicians Medical Group (July 24, 2018), the Ninth Circuit Court of Appeals voided a settlement agreement between a physician and his former employer because one provision imposed a restraint of trade in violation of California’s strict statute on non-compete covenants, Business & Professions Code Section 16600. The Court found that the broad no-rehire provision constituted a “restraint of substantial character” in two ways.

The DTSA’s Ex Parte Seizure Remedy – Two Years Later

Enacted in May 2016, the federal Defend Trade Secrets Act (DTSA) created a new remedy that was not available under any state's Uniform Trade Secrets Act (UTSA) – the ex parte civil seizure. This remedy permitted plaintiffs to obtain a seizure order ex parte from a federal court. Upon entry of the order, U.S. marshals would be dispatched, without notice to the defendant, to seize the evidence.

States Look for New Angle to Fight No-Poach Agreements

Attorneys general in ten states and the District of Columbia have recently launched an investigation into the employment practices of eight fast-food franchises. The group sent a joint letter to the companies requesting information on the companies’ use of restrictive covenants including “‘employee non-competition,’ 'no solicitation,' 'no poach,' 'no hire,' or 'no switching' agreements (collectively referred to as ‘No Poach Agreements’).”

Antitrust Director Signals Heightened Focus On Deterring No-Poach Agreements In Healthcare Industry

As we have reported in previous articles, the Department of Justice’s Antitrust Division has repeatedly reaffirmed its intent to criminally prosecute companies that restrict labor market competition through the use of unlawful no-poach and wage-fixing agreements.

A “Crowbar to Get Everything”: Motorola v. Hytera and the Issues with Imaging Computers in Discovery

In an interesting 15-page discovery order, Magistrate Judge Jeffrey Cole of the Northern District of Illinois rejected Motorola’s attempt to obtain images of the computers of a number of Hytera employees. Motorola has brought claims against Hytera, alleging that the defendant misappropriated Motorola trade secrets to develop a two-way radio. Hytera filed a motion to dismiss, arguing that the statute of limitations had expired on the claims. Judge Samuel Der-Yeghiayan converted the motion to dismiss into a motion for summary judgment and authorized discovery solely on the statute of limitations issue, namely whether Motorola was entitled to an equitable tolling exception based on Hytera fraudulently concealing its activity.

The Latest On State-Level Noncompete Reform

Earlier this year, Vermont legislators introduced House Bill 556, an outright ban on noncompetes and any other restrictive covenant that restrains an individual’s livelihood. This legislative overhaul of Vermont restrictive covenant law is one of several state-level reform efforts proposed in the wake of the White House’s 2016 “call to action” for state restrictive covenant reform. Indeed, since the call to action, over a dozen state legislatures from across the country have proposed and enacted legislation reforming employers’ use of restrictive covenants. As more and more states answer the “call” and alter an already inconsistent legal landscape, employers who use restrictive covenants should review their agreements to ensure compliance with the states’ laws in which they operate.

Part III: State Legislatures’ Initial Response to the Call to Action - Proposed Legislation

In this final installment of our three-part series, we highlight restrictive covenant reform legislation that is currently pending before the state legislatures. The following states have proposed restrictive covenant reform:

Part II: State Legislatures’ Initial Response to the Call to Action

Following the Obama White House’s Call to Action in October 2016, state legislatures have been busy enacting restrictive covenant reform, particularly to non-compete laws. By our count, eight (8) states have enacted some type of reform since the Call to Action. Some of this activity may have been in the works prior to the Call to Action, but others are undoubtedly following the Obama White House’s Best-Practices Policy Objectives:

State Legislatures Heed the Obama White House’s “Call to Action”: Part 1 of a 3-Part Series Examining State-Level Restrictive Covenant Activity

State legislatures across the country have been active in recent years proposing and enacting legislation concerning employers’ use of restrictive covenants. These new laws alter the legal landscape in an area where compliance was already difficult due to the vast differences between states. It is imperative that employers stay up-to-date on these changes. Accordingly, this will be the first of three posts addressing the recent wave of state-level legislative activity in this area that we have seen over the past year and a half.

Senators Introduce Bill for Nationwide Non-Compete Ban

U.S. Senators Elizabeth Warren (D. Mass.), Ronald Wyden (D. Ore.) and Christopher Murphy (D. Conn.) recently introduced Senate Bill 2782 which, if enacted, would for all practical purposes amount to a nationwide ban on employee covenants not to compete. Dubbed the Workforce Mobility Act of 2018, Senate Bill 2782 (2018) would ban any company engaged in interstate commerce from requiring any employee to sign a covenant not to compete.