Articles Discussing Restrictive Covenants In The Workplace And Other Topics Relating To Unfair Competition.

Three recent appellate court decisions teach employers some valuable lessons when drafting employment agreements that contain restrictive covenants.

Nondisclosure Agreements (NDAs) have recently come under fire within the #MeToo debate. Opponents of the NDA argue that its sole (and negative) purpose is to silence victims of sexual harassment and allow those accused to continue to harass others. NDA proponents, however, offer a different perspective. An NDA is one of many mechanisms used to defend against allegations that are in dispute. It can provide a smooth transition to resolution rather than litigation, and can benefit both the alleged victim and the employer.

Employers often place limitations on their employees’ ability to compete following the termination of the employment relationship. The justification for restraints on trade is that employers have a protectable interest in their customer and vendor relationships, the goodwill associated with their brand, and their confidential information and trade secrets.

The use of non-competition agreements between employers and employees has raised concerns at the Federal Trade Commission (FTC). On January 9, 2020, the agency held a program “to examine whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts.”

On November 14, 2019, the U.S. Senate Committee on Small Business and Entrepreneurship held a hearing to examine recently proposed bills that would regulate non-compete agreements at the federal level. Discussion during the hearing indicates that it may have the necessary support to move forward.

A bipartisan bill aimed at generally banning non-compete agreements across the country has been introduced in the Senate by Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.). The Workforce Mobility Act of 2019, which closely tracks the Democrat-led Workforce Mobility Act of 2018, is a stark contrast to the limited and more measured approaches that have predominated at the state level.

AT&T Services, Inc. and its subsidiary, DirectTV, LLC (collectively, “AT&T”) sued Max Retrans, LLC (“Max Retrans”), a consulting company that works with local broadcasting companies to sell their content to Pay-TV service providers for re-broadcast.

The large majority of employment based trade secret claims start with an employer uncovering evidence that its employee or former employee improperly downloaded confidential business information. But a recent case in Boston illustrates that such evidence may not be necessary to bring a trade secret or unfair competition claim.

A decision from the Northern District of Illinois is the latest to reiterate a stern warning we have long highlighted for employers: when insufficient steps are taken by an employer to protect its own proprietary information, courts will not provide trade secret protection when such information is misappropriated.

In Abrasic

A decision from the Northern District of Illinois is the latest to reiterate a stern warning we have long highlighted for employers: when insufficient steps are taken by an employer to protect its own proprietary information, courts will not provide trade secret protection when such information is misappropriated.

According to a recent decision from a federal district court in Illinois, Bose Corp. may monitor and collect information about the music and audio files consumers choose to play through its wireless products and transmit that information to third parties without the consumers’ knowledge. Such action does not violate the federal Wiretap Act or the Illinois Eavesdropping Statute. As such, the Court granted Bose’s motion to dismiss the plaintiff’s class action claims.

Yesterday, the U.S. Supreme Court rejected a petition for a writ of certiorari by Zappos requesting the Court to review a Ninth Circuit Court decision which allowed customers affected by a data breach to proceed with a lawsuit on grounds of vulnerability to fraud and identity theft.

Earlier this month, a group of six United States Senators made a joint request for the Government Accountability Office (GAO) to investigate the impact of non-compete agreements on workers and the U.S. economy as a whole. This action suggests that the federal non-compete reform effort is not going away.

Last year, Democrats in the United States Senate and House of Representatives introduced bills — S.2782 and H.R.5631 — banning non-compete agreements in the vast majority of workplaces across the country.