INSIGHT: Protecting Key Employees, Trade Secrets in the Post-Covid-19 Job Market

Bloomberg Law Daily Labor Report

Peter A. Steinmeyer, David J. Clark, and Brian E. Spang, Members of the Firm in the Employment, Labor & Workforce Management practice, co-authored an article in the Bloomberg Law Daily Labor Report, titled “INSIGHT: Protecting Key Employees, Trade Secrets in the Post-Covid-19 Job Market.”

Following is an excerpt:

As employers emerge from Covid-19 stay-at-home orders, they have a unique opportunity to invest in new talent and improve the quality of their team. At the same time, they need to protect their own MVPs and trade secrets.

Pre-Covid 19, unemployment was at record lows and the market for talent was overheated in many industries and locales. Now, painfully large numbers of top people from excellent companies are unemployed or underutilized, or facing pay cuts or slim to non-existent year-end bonuses.

This is an opportunity for smaller employers or start-ups to hire “big company” talent, and for larger employers to cherry pick talent from weaker competitors.

It is a Great Time to Hire

Moreover, as a practical matter, in this new era, restrictive covenants may be less enforceable, or at least less restrictive. For one thing, competitors may be litigation-averse. Many companies are preserving cash and thus less likely to spend significant legal fees on discretionary litigation, such as litigation to enforce restrictive covenants of former employees.

Furthermore, with unemployment at historic highs, a judge presented with an application to restrain or enjoin an individual from taking a new job may be more likely to view the restrictions with strong disfavor—much more so than in boom times.

Additionally, after months of court closures and limitations, judicial priorities will be elsewhere, including criminal matters and a backlog of civil jury trials.