August 21, 2018

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Employment Law This Week (VIDEO): Employee Mobility

We invite you to view Employment Law This Week® - a weekly rundown of the latest news in the field, brought to you by Epstein Becker Green. We look at the latest trends, important court decisions, and new developments that could impact your work. Join us every Monday for a new five-minute episode!

This week, we focus on employee mobility, an area of law that’s top of mind for many employers and employees at all levels. The laws that apply to such tools as non-compete and non-solicitation agreements are changing almost daily in the courts and legislatures, and companies are finding it challenging to protect their confidential information, balance employee interests, and have enforceable protections. Aime Dempsey, from Epstein Becker Green, provides an update on some of the latest legislation in this area:

“There's a lot of activity going on right now in employee mobility in the legislative arena. Just a couple of weeks ago, on April 26th, bills were proposed in both the United States House and the United States Senate that would ban non-compete agreements. Non-compete agreements are actually right now only banned in three states: California, Oklahoma, and North Dakota. So, this would be a broad, nationwide ban for any employers who engage in commerce or who make products engaged in commerce. In New York City last summer, there was a law proposed to restrict non-competes for low-wage workers.”

In terms of enforcement, employers have been watching and waiting to see whether the Department of Justice’s Antitrust Division will continue the Obama-era emphasis on anti-poaching agreements and other employee mobility issues in the Trump administration. We asked Aime if 2018 has brought any new insights:

“It looks like, under this administration, the antitrust guidance will remain a priority. In October of 2016, the Department of Justice Antitrust Division announced a priority to enforce rules against no-poach agreements between employers. In January of this year, the DOJ Antitrust Division announced that it would be aggressively going after employers that violate the no-poach guidelines.”

As laws in this area continue to evolve, so does litigation. Recent rulings have created some further guidance that can help employers seeking to protect their interests and also help them know when to litigate. Here’s Peter Steinmeyer, from Epstein Becker Green, with more:

“The lessons that employers can draw from recent non-compete and trade secret cases are that courts are reluctant to restrain an individual from going to work. However, if there was an actual theft of trade secrets, a court would be far more likely to grant injunctive relief. So, the cases that we see actually going to court and being filed tend to be those where there was an actual theft.”

Even in the most restrictive legal environments, options are available for employers looking to protect their companies’ interests. California is well known for its strict limitations on employers in this area. State law prohibits nearly all non-competition and non-solicitation agreements. Jonathan Brenner, from Epstein Becker Green, tells us how, even in California, some employee departure protocols can help protect trade secrets:

“Having well-prepared and thorough exit procedures for employees can be very helpful—procedures that include an exit interview process; processes for the return of equipment and other property; and the return of information, including information stored on the cloud or other web-based storage media. And an acknowledgment and certification form that serves as a reminder and statement of intent to comply with confidentiality obligations can all be very helpful, and they are very important features of such exit procedures. There are some more substantive arrangements that are at least possible in appropriate circumstances. Agreements for terms with employees that cannot be terminated at will early on by both sides is one example of that. Deferred compensation arrangements with vesting conditions as an incentive for employees to stay on the job and not leave for a competitor and even ERISA plans that contain non-competition restrictions, which, at least as a matter of federal, ERISA law can be enforceable.”

One option that employers in all jurisdictions can consider is the garden leave provision.

“Garden leave provisions are clauses under which an employee will give 30 to 90 days’ advance notice of their resignation. They help employers because they are an alternative to a traditional non-compete. Because they’re shorter in length, and because the employee is paid during the garden leave period, both employees and their new employers tend not to challenge them, and courts are more likely to enforce them. As a result, it's an alternative to a traditional non-compete that's more likely to be enforced and less likely to be challenged.”

Expect to see more new legislation and litigation as the year progresses.

©2018 Epstein Becker & Green, P.C. All rights reserved.

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About this Author

Jonathan Brenner, Epstein Becker Law Firm, Labor and Employment Attorney
Member

Jonathan Brenner s a Member of the Firm in the Employment, Labor & Workforce Management practice in the Los Angeles office of Epstein Becker Green. He represents employers from a wide range of industries, including, among others, financial services, health care, retail, insurance, performing arts, and professional services, as well as academic institutions.

310-557-9504
Aime Dempsey, Employment Attorney, Epstein Becker Law Firm
Senior Attorney

AIME DEMPSEY is a Senior Attorney in the Litigation and Labor and Employment practices, in the firm's New York office. She handles a broad range of commercial and employment-related matters in federal and state courts and before arbitration tribunals and administrative agencies.

Ms. Dempsey has experience representing clients in a wide variety of industries and areas, concentrating on the financial services industry, but also including the advertising and media, health care, pharmaceutical, manufacturing and distributing, and not-for-profit industries. She is a member of the firm's Technology, Media, and Telecommunications strategic industry group.

212-351-3764
Member

PETER A. STEINMEYER is a Member of the Firm in the Labor and Employment practice of Epstein Becker Green and serves as the Chicago office Managing Shareholder. Practicing in all aspects of labor and employment law, he is also Co-Chair of the firm's Non-Competes, Unfair Competition and Trade Secrets Practice Group.

Mr. Steinmeyer advises clients on the enforcement and drafting of non-compete, non-solicitation, and employment agreements, litigates trade secret, non-compete, non-solicitation, raiding, and other restrictive covenant matters in...

312-499-1417
George Carroll Whipple III, Epstein Becker Green, Workforce Management Lawyer, Hiring Matters Attorney
Member

GEORGE CARROLL WHIPPLE, III, is a Member of the Firm in the Employment, Labor, and Workforce Management practice, in the New York office of Epstein Becker Green. He hosts the firm's innovative weekly video program, Employment Law This Week.

Mr. Whipple:

  • Counsels employers on workplace issues, including hiring and promotion, firing and discipline, wage and hour, and the implementation of employment policies, to ensure compliance with federal and state laws

  • ...
212-351-3773