Recent Blog Posts
- Recent Decision Questions Use of No-Poach Clauses in Franchise Agreements States across the country have been using enforcement actions, legislation, and interpretive guidance to limit employers’ ability to enforce restrictive covenants against low wage workers. The recent decision in Butler v. Jimmy John’s Franchise, LLC et. al., 18-cv-0133 (S.D. Ill. 2018) suggests this trend may extend to federal antitrust law.
The Butler case relates to the legality of certain restrictive covenants in Jimmy John’s franchise agreements. The Complaint alleges that Jimmy John’s required franchisees to agree not to hire any job... More
- New York Court Limits Scope of Damage Awards in Trade Secret Actions In E.J. Brooks Company v. Cambridge Security Seals, the Court of Appeals of New York narrowed the scope of permissible damage claims plaintiffs can assert in trade secret actions under New York law. The ruling denies plaintiffs the ability to recover costs that defendants avoided through misappropriating trade secrets (known as “avoided costs” theory), making New York law less attractive to certain types of trade secret actions due to the state’s conservative approach in calculating damages.
E.J. Brooks Company d/b/a TydenBrooks... More
- South Dakota Supreme Court Limits Enforceability of Non-Solicitation Clause in Non-Compete Agreement Whenever possible, restrictive covenants should be carefully worded to track the language of applicable law in the jurisdiction where they will be enforced. The South Dakota Supreme Court’s recent decision in Farm Bureau Life Insurance Co. v. Dolly provides a strong reminder of this lesson. The case concerned an action by Farm Bureau to enforce a restrictive covenant against Ryan Dolly who had worked for Farm Bureau as a captive life insurance agent. Dolly’s contract with Farm Bureau contained a... More
- DOJ Antitrust Division Follows Through on Warnings Regarding Antitrust Scrutiny of Employer Non-Solicitation Agreements On April 3, 2018, the Department of Justice Antitrust Division (“DOJ”) announced that it had entered into a settlement with two of the world’s largest railroad equipment manufacturers resolving a lawsuit alleging the defendant employers had entered into unlawful “no-poach” agreements. The DOJ’s Complaint, captioned U.S. v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corp., 18-cv-00747 (D. D.C.) alleges that three employers referred to as Knorr, Wabtec and Faively, unlawfully promised one another “not to solicit, recruit, hire without approval,... More
- Colorado Places New Limitation on Physician Restrictive Covenants Earlier this month, Colorado amended its law governing physician non-compete agreements (C.R.S. § 8-2-113(3)). Since its enactment in 1982, that statute generally has prohibited agreements restricting the rights of physicians to practice medicine, but has allowed contractual provisions requiring a physician to pay damages arising from his or her competition if the damages are reasonably related to the injury suffered by the employer or other contracting party. Under the amended statute, “a physician may disclose his or her continuing practice of... More
- Aggressive New Antitrust Guidance for Human Resources Professionals Threatens Criminal Prosecution for Certain Unlawful Wage Fixing and No Poaching Agreements Following up on a string of civil enforcement actions and employee antitrust suits, regarding no-poaching agreements in the technology industry, on October 20, 2016 the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) issued Antitrust Guidance for Human Resources Professionals (the “Guidance”). The Guidance outlines an aggressive policy to investigate and punish employers, and individual human resources employees who enter into unlawful agreements concerning employee recruitment or retention.
The Guidance focuses on three types of antitrust violations:
Wage fixing agreements: agreements... More