Noncompetes Under New State Law Restrictions: Wage Requirements, Notice, Time, Layoffs, Proposed Federal Legislation

A live 90-minute CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Wednesday, June 29, 2022

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, June 3, 2022

or call 1-800-926-7926

This CLE course will discuss the latest state legislative changes and case law trends regarding noncompete agreements and other restrictive covenants in New York, California, Illinois, Washington, and other states and the current status of proposed changes to federal labor law. The panel will offer best practices for structuring enforceable contracts and explain how to determine whether existing agreements are lawful.

Description

Noncompetition provisions in employment agreements and, to a lesser extent in business purchase agreements, have long been the target of state regulation. The rationale is that restraints on trade remove employees from the job market and, in the acquisition context, may remove property from commerce.

From New York's requirements that noncompetes protect only an identified and legitimate business interest to California's near ban on noncompetition restrictions, states are increasingly passing legislation limiting these agreements' enforceability. Statutes have imposed income minimums for enforceability and required release if the employee is terminated without cause. Some states mandate that independent consideration be paid to employees to create enforceability and narrow the time frame for enforcement. State laws also address whether a noncompete would apply to agreements between two businesses exiting a joint venture.

State laws that apply strict requirements to noncompetition agreements attempt to limit use in industries and positions that do not require particular technical expertise and skills. The statutory differences between states make it difficult for employers with regional or national reach to implement uniform noncompetition policies. These differences can frequently lead to complicated conflict-of-law issues, especially when employees move between states or work in different states for the same employer. This often leads to the courts of one state applying the law of another and can sometimes bring about unpredictable results.

The Federal Trade Commission and Department of Justice held a public workshop in December 2021 that continued to support the potential creation of a rule to restrict noncompetition clauses in employer-employee contracts throughout the United States. It is currently unclear how the federal government can synchronize different state approaches, and it is unclear if this is an administration priority for the labor market.

Listen as our expert panel discusses this evolving issue to provide employment counsel with practical advice on drafting and negotiating noncompetition provisions in light of current state-specific restrictions.

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Outline

  1. Overview of noncompetition agreements
    1. Use in an employment contract
    2. Use in business sales, joint ventures, other non-employment settings
  2. Common state restrictions
    1. Minimum income
    2. Release in the event of layoffs
    3. Independent consideration
    4. Legitimate business interest
    5. Highly skilled employees
    6. Time, geography, scope
  3. State-specific
    1. California
    2. New York
    3. Illinois
    4. Washington
    5. Maryland
    6. Others
  4. Federal response

Benefits

The panel will review these and other issues:

  • What caused the growth in the use of noncompetition provisions in employment contracts?
  • How and why are states restricting the use of noncompetition agreements?
  • How can a noncompetition provision be properly implemented in non-employment situations?

Faculty

Bindra, Amit
Amit S. Bindra

Partner
The Prinz Law Firm

Mr. Bindra focuses his practice on employment and executive agreements, noncompete, non-solicit and trade secret...  |  Read More

Milligan, Robert
Robert B. Milligan

Partner
Seyfarth Shaw

Mr. Milligan Co-Chairs the firm's Trade Secrets, Computer Fraud & Noncompetes Practice Group. His practice...  |  Read More

Redmond, Jennifer
Jennifer G. Redmond

Partner
Sheppard Mullin

Ms. Redmond is a partner in the Labor and Employment Practice Group in the firm's San Francisco office and is...  |  Read More

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Early Discount (through 06/03/22)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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