Recovering Damages for Breach of Restrictive Covenants: Non-Competition, Non-Solicitation, and Non-Disclosure

Pursuing Lost Profits, Clawback Compensation, Inducement Payments, Loss of Good Will, and Other Damages

Recording of a 90-minute CLE webinar with Q&A

Conducted on Tuesday, October 6, 2020

Recorded event now available

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Program Materials

This CLE webinar will guide employment counsel for proving damages after a current or former employee breaches a restrictive covenant, whether that is a covenant not to compete with the employer, a non-solicitation of the employer's employees or customers, or a nondisclosure agreement regarding the employer's trade secrets or other confidential information. The panel will also discuss circumstances in which the breach of a restrictive covenant implicates the fiduciary duty of loyalty and potential resulting damages.

Description

When a current or former employee breaches restrictive covenants in an employment agreement, such as a noncompetition, non-solicitation, or nondisclosure agreement, the employer may often, depending on the jurisdiction, pursue damages against the employee as well as injunctive relief. Quantifying the damages to the business resulting from the breach of covenant can be challenging.

The Defend Trade Secrets Act of 2016 provides additional avenues for damages for trade secret theft, as do individual state jurisdictions. Courts may double damages and award attorneys' fees in the event of willful and malicious appropriation of trade secrets.

Employers can also sometimes pursue damages from a former worker's new employer for interference with the departing employee's restrictive covenants. Companies face additional challenges when attempting to enforce restrictive covenants when some or all of the actionable conduct takes place outside the U.S.

Listen as our authoritative panel discusses strategies and best practices for employers to pursue damages against a current or former employee and/or his new employer following a breach of a covenant not to compete, solicit, or disclose confidential information. Our panel will offer drafting strategies to give companies the most robust platform for enforcing their contractual and fiduciary rights.

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Outline

  1. Potential causes of action following the breach of a restrictive covenant
    1. Breach of covenant
    2. Breach of the fiduciary duty of loyalty
  2. Pursuing damages from the employee
    1. Lost profits damages
    2. Clawback compensation
    3. Restitution
    4. Goodwill impairment damages
    5. Liquidated damages
  3. Damages available under Defend Trade Secrets Act of 2016
  4. Pursuing damages from employee's new employer
    1. Evaluating when to seek damages from a new employer
    2. Tortious interference with contract
    3. Aiding and abetting breach of fiduciary duty
  5. Tips on drafting enforceable restrictive covenants

Benefits

The panel will review these and other high priority issues:

  • What types of damages may employers pursue when a current or former employee breaches a restrictive covenant?
  • How does the Defend Trade Secrets Act of 2016 address damages for disclosing trade secrets?
  • What are the methodologies to establish damages?
  • When can and should an employer go after a former employee's new employer for damages for breach of a restrictive covenant?
  • What remedies and damages are available when the wrongdoing occurs outside the U.S.?
  • How can employers draft enforceable covenants to maximize potential damages and equitable remedies?

Faculty

Coleman, Jesse
Jesse M. Coleman
Partner
Seyfarth Shaw

Mr. Coleman assists clients with breach of contract and general business tort litigation. He has handled numerous trade...  |  Read More

Weibust, Erik
Erik W. Weibust
Partner
Seyfarth Shaw

Mr. Weibust represents clients in commercial litigation matters, including franchise, distribution, and real estate...  |  Read More

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