Peter A. Steinmeyer, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Chicago office, was quoted in Law360, in “The Biggest Noncompete Developments of 2018,” by Braden Campbell. (Read the full version – subscription required.)
Following is an excerpt:
This year saw courts continue to look skeptically on broad noncompete agreements, while Massachusetts passed first-of-its-kind legislation limiting what businesses can block their ex-workers from doing.
Here, Law360 looks at four developments from 2018 that lawyers who handle restrictive covenants need to know about. …
Massachusetts Gets Tough on Noncompetes
While California’s blanket ban on noncompete agreements makes it the friendliest state for workers who jump ship, a new law enacted in August in Massachusetts has the Bay State hot on California’s heels.
The Massachusetts Noncompetition Agreement Act, which applies to every agreement signed Oct. 1 or later, places several limits on post-employment restrictive covenants. Chief among them is a requirement that employers pay workers half their salary or some other negotiated compensation during the period they’re barred from work for competitors. Although several states have laws limiting the use of noncompetes, Massachusetts’ is the only one that makes employers give workers so-called “garden leave.”
Other provisions of the bill block employers from signing low-wage workers, university students and minors to noncompetes and enforcing agreements against workers laid off or fired without cause. It also limits the pacts’ duration to a year and requires that they be “no broader than necessary” to protect certain “legitimate business interests,” such as trade secrets or confidential information.
Peter Steinmeyer, an employee mobility attorney at Epstein Becker Green, said the Massachusetts law is “reflective of this trend against noncompetes” in courts and state legislatures, noting New Jersey, Pennsylvania and Vermont are considering anti-noncompete measures. …
The ‘Janitor Rule’ Makes a Ruling
Noncompete attorneys often trot out what’s known as the “janitor rule” to test whether a given employment agreement will hold up in court. The rule is premised on a question: Is the agreement so overbroad that it would prevent someone from working as a janitor for a competitor? If yes, the agreement probably won’t be enforced.
This year, an Illinois federal judge endorsed the rule — obliquely, at least — in a noncompete row between staffing company Medix Staffing Solutions Inc. and a former director. …
Steinmeyer, a self-proclaimed “noncompete nerd,” called the ruling his favorite of the year for its citation of the janitor rule. It’s also yet another testament to the principle that employers shouldn’t overreach with their noncompetes, he said.
“As long as you draft narrowly, you really can meet your need,” Steinmeyer said. “But if you just put out some blunderbuss noncompete … a judge is going to throw it out and they’re not going to enforce it at all.”