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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.

Department Of Justice Fires Warning Shot Over Unlawful No-Poach Agreements

On April 3, 2018, the Department of Justice’s Antitrust Division settled an antitrust action against the world’s two largest rail equipment suppliers, accusing them of maintaining “naked” no-poaching agreements in violation of the Sherman Act (see Complaint and Consent Decree).

Don’t Worry, Your Secret is Safe With Me

Many defendants attempt to defend claims for trade secret misappropriation by claiming that they never used or disclosed the information in question. Based on a recent ruling by a federal district court in New York, however, that may not matter. In AUA Private Equity Partners, LLC v. Soto, No. 1:17-CV-8035-GHW (S.D.N.Y. Apr. 5, 2018), an employer filed suit against one of its former employees, asserting claims for trade secret misappropriation under the Defend Trade Secrets Act (“DTSA”), the federal law enacted in May 2016. The employer alleged that shortly before her termination, the employee uploaded files containing confidential and proprietary business information from her company-issued laptop to her personal cloud storage account on Google Drive. Following a preliminary injunction hearing, the employee moved to dismiss the employer’s DTSA claim on grounds that the employer did not allege that she ever used or disclosed the files, only that she acquired them.

Did Your Non-Compete Agreement Just Get Laid Off?

Imagine this scenario: Like most businesses, you have undergone the effort and expense of recruiting quality talent to join your workforce. After employment offers are extended and accepted, you provide valuable training to your newest employees. To protect your investment, you have obtained a strongly worded and enforceable non-compete agreement.

Combatting Corporate Espionage In The Digital Age

In the modern age of relatively cheap and ever-evolving technology, corporate espionage is a real threat that could be perpetrated by any employee or other insider at any time. The term “corporate espionage” covers many different types of behavior, ordinarily taking the form of a malicious company insider secretly stealing confidential company information, usually for use in a competing business. The insider may be planning on joining an existing competitor, or may be planning on founding a new competing business of their own. In essence, however, the term refers to any act of spying that is carried out for commercial purposes. Regardless of the form it takes, the wrongdoer will be looking to exploit the time, money, and hard work you have put in to make your business successful for their own malicious purposes.

Can Silicon Valley Keep a (Trade) Secret?

The simplest, most valuable, yet commonly overlooked piece of advice any trade secret owner can receive is this: Protect yours trade secrets! It seems crazy that this simple advice warrants repeating, but apparently, it does, particularly in Silicon Valley where billions of dollars have been spent researching and developing electric and autonomous vehicle technology.