October 18, 2021

Volume XI, Number 291

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October 15, 2021

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Louisiana Expands Scope of Non-Competes Law to Include Partners, Shareholders and LLC Members

Louisiana’s amended non-competition statute (La. R.S. 23:921), which meaningfully expands the application of employment-related non-compete restrictions within the state, went into effect on August 1, 2020.  This amendment expressly expands the reach of Louisiana non-compete law by, among other things, adding corporate shareholders, partners in partnerships, and members of limited liability companies, to the category of individuals who may be subject to employment non-competition obligations.  This expansion of the law stands in stark contrast to the approach recently taken by many state legislatures across the country (e.g.WashingtonMassachusetts, and Maryland), which have sought to narrow the categories of individuals (e.g., by age, wage, or FLSA classification) who may be subject to non-competes.

As now amended, La. R.S. 23:921 specifically identifies individual “shareholders of [a] corporation,” “partners of [a] partnership,” and “members of [a] limited liability company” as individuals who may also be subject to a non-compete agreement restricting them from “becom[ing] employed by” a competitive company.  This amendment closes what could have been utilized as a technical loophole in non-compete enforcement, as previously a preexisting employment relationship was required in order to maintain a non-compete restriction.

Notably, the amendments to La. R.S. 23:921 do not change the general enforceability conditions for a non-compete agreement in Louisiana.  Specifically, the non-compete obligation is still limited to application: (1) within a specified parish or parishes, municipality or municipalities, or parts thereof, (2) so long as the employer carries on a like business therein, and (3) may not exceed a period of two years.

© 2021 Proskauer Rose LLP. National Law Review, Volume X, Number 248
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About this Author

John Barry Employment Attorney Proskauer Rose
Partner

John P. Barry is a partner in the Labor & Employment Law Department and co-head of the Non-Compete & Trade Secrets Group and the Higher Education and Title IX Group.

John is an experienced trial lawyer who has appeared in courts across the U.S. He is sought out by clients to litigate and/or provide counsel for their most sensitive, sophisticated and important restrictive covenant, trade secret and employment matters. He is able to quickly dissect the issues and recognize the pressure points of how a case will unfold before a judge, jury, or administrative...

+1.212.969.3081
Nicole A. Eichberger, Labor and Employment Attorney, Proskauer Law Firm
Senior Counsel

Nicole A. Eichberger is a Senior Counsel in the Labor and Employment Department, and a member of the Class/Collective Action Group and the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center, resident in the New Orleans office. Nici assists clients in the defense of numerous complex employment and ERISA class and collective actions, including those alleging FLSA, ERISA and Executive Compensation Claims. Nici is also a member of the Firm’s eDiscovery Group and advises clients on eDiscovery matters, including day-to-day preservation, investigations, and...

504-310-2024
Daryl Leon, Proskauer Law Firm, Labor and Employment Litigation Attorney
Associate

Daryl Leon is an associate in the Labor & Employment Law Department and a member of the Firm's Employment Litigation & Arbitration Group.

Daryl has experience in managing all aspects of litigation, including taking and defending depositions, motion practice, oral arguments, and trials. His practice focuses on defending employers in state and federal court lawsuits and administrative agency proceedings against claims of discrimination, harassment, whistleblowing and retaliation, and violations of wage and hour laws. He has represented...

212-969-3262
Eric D. Novak Labor & Employment Proskauer Rose New Orleans, LA
Associate

Eric Novak is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Eric received his J.D. from Tulane Law School, where he was a recipient of the Jackson-Ryan Pro Bono Advocate Award and a member of the American Inn of Court, Tulane Law Chapter. While in law school, he served as a judicial extern to the Honorable James L. Dennis at the United States Court of Appeals for the Fifth Circuit and the Honorable Sarah S. Vance and the Honorable Nannette Jolivette Brown, both at the United States District Court for the...

504.310.2072
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