James P. Flynn and Yael Spiewak, attorneys in the Litigation and Employment, Labor & Workforce Management practices, and Paul A. Gomez and Purvi B. Maniar, attorneys in the Health Care and Life Sciences practice, authored an article in Bloomberg BNA Daily Labor Report titled “Assignment Lessons: Eighth Circuit Finds Assigned Non-Competes Enforceable - Under Certain Facts.” The article discusses how the Eighth Circuit’s decision on Symphony Diagnostic Servs. No. 1 v. Greenbaum may affect employers seeking to enforce or to avoid enforcement of noncompetition and confidentiality agreements following the acquisition of a business via an asset purchase.
Following is an excerpt (see below to download the full report):
Based on the Eighth Circuit’s decision, another lesson for employers is that they may want to consider stand-alone non-compete or confidentiality agreements, taking care, of course, to assure that there remains valid supporting consideration under applicable law. Having the non-compete or confidentiality agreement stand alone and apart from any employment contract at issue was critical for the Eighth Circuit in distinguishing assignable agreements from personal service contracts that may not be assigned. Likewise, such employers may want to negotiate agreements that include language specifically allowing assignment to an acquirer of the business without consent of the other party, typically found in a successors and assigns clause. Use of language that precludes working in a particular field or a narrow subset within that field may make assigned rights easier to enforce than more generic references to prohibiting competition with any aspect of the employer’s business, which, post sale, may have expanded greatly.
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