Minnesota’s new law will take effect on July 1, 2023, prohibiting all noncompete agreements, except those entered during the sale of a business or in anticipation of the dissolution of a business. The law will not apply retroactively to void existing noncompete agreements and will not prohibit the continued use of non-solicitation, confidentiality, trade secret
UPDATE: after this post went to press, HB 251 was amended by substitution a second time and passed the House on a unanimous vote on February 24, 2016. As passed, the bill contained substantive changes to the provisions outlined in the post below. HB 251 is now headed to the Utah State Senate for
Many employers in Utah use non-competition agreements to protect their confidential information, customer relationships and investment in employee training and development. In a somewhat surprising move, the usually employer-friendly Utah State legislature has signaled its willingness to join California and a handful of other states in attempting to regulate these kinds of agreements.
The Utah
As we blogged about earlier, courts in most states just plain don’t like employee noncompete agreements. Particularly when it comes to mid- and low-level employees, courts worry that enforcing a noncompete agreement will hamper innovation, restrict competition, and unfairly burden a former employee’s ability to earn a living. For that reason, a court typically will review an noncompete’s justification, scope, and length with the judicial equivalent of a fine-tooth comb.
Courts have been picking away at the enforceability of employee noncompetes for years, but more recently, legislatures have jumped into the mix with varying levels of aggressiveness. California has long banned noncompetes outright, and several other states either have followed suit (e.g., North Dakota) or are considering whether to pass similar laws (e.g., Massachusetts, Washington). Still others have adopted laws that make it easier for employers to enforce noncompetes (e.g., Georgia), or are considering whether to do so to remedy past judicial reticence in the area (e.g., Wisconsin).Continue Reading Oregon Tightens the Screws on Noncompetes: 18 Months Will Soon Be the Maximum Period of Restriction
Most competent employment lawyers with experience pursuing and/or rebuffing enforcement of noncompetition agreements know that enforcement against low level workers is highly unlikely. If recent news reports are true, Jimmy John’s apparently never got that memo.
According to reports in The New York Times, The Oregonian and the Huffington Post, the restaurant franchise is requiring all workers, including sandwich makers, to sign broad noncompetition agreements that restrict their employment opportunities for two years after leaving their cushy, highly technical jobs at Jimmy John’s.
Let’s start with the understanding that courts don’t like noncompetition restrictions, which limit a worker’s ability to pursue his career as he sees fit. Courts use a variety of tools to limit the enforcement of those clauses. Although courts use different terms to describe it, almost every decision analyzing enforcement of a noncompetition agreement talks about whether the former employer has a “protectible interest.” In layman terms that means, is there something legitimate that the former employer actually needs to protect by restricting the post-termination employment opportunities of its former employees? Customer relationships, knowledge of the company’s confidential or trade secret information, or specialized training provided by the former employer are often found to be sufficient “protectible interests” to justify enforcement of a contract clause which limits the worker’s future employment opportunities. If there is no “protectible interest,” a court won’t enforce the agreement.Continue Reading “Freaky Fast” Oppression? Jimmy John’s Should Reconsider its Approach to Blanket Noncompete Agreements
Legislation that significantly altered an employer’s ability to utilize noncompete agreements in the state of Oregon took effect on January 1, 2008. How has the new law impacted corporate policies around restrictive covenants? What are the new best practices you need to implement to stay in compliance?
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