New California Law Further Strengthens the Golden State’s Noncompete Ban

On October 13, 2023, California Governor Gavin Newsom signed into law Assembly Bill 1076, which further expands the claims and remedies against California employers for noncompete agreements that violate state law and requires employers to provide individualized notice to employees and former employees who are parties to noncompete agreements that violate California law. The enactment of this law, on the heels of the enactment of Senate Bill 699 (see our previous Alert), further reinforces the state’s strong policy of prohibiting noncompete agreements in any form.

Read the full Alert on the Duane Morris LLP website.

New York Likely to Become the Latest State to Ban Employee Noncompetition Covenants

On June 20, 2023, the New York Assembly approved legislation that would ban noncompetition agreements in employment contracts. The bill, A1278B/S3100A, is expected to be signed by Governor Kathy Hochul, which will make New York the fifth state in the U.S. to ban noncompetition covenants in agreements between employers and employees. Similar statutes already exist in California, Oklahoma, North Dakota and Minnesota.

Read the full Alert on the Duane Morris LLP website.

Minnesota Joins the Ranks of States Banning Employee Noncompetition Covenants

Minnesota is now the fourth state in the U.S. to ban noncompetition covenants in agreements between employers and employees, under a bill signed into law by Governor Tim Walz on May 24, 2023. Similar statutes already exist in California, Oklahoma and North Dakota.

When Does the Law Take Effect?

The law is effective immediately, but only applies to contracts and amendments entered into on or after July 1, 2023―i.e., the law does not apply to covenants not to compete entered into prior to July 1, 2023.

Read the full Alert on the Duane Morris LLP website.

NLRB Effort the Latest Attempt to Curtail Enforcement of Non-Compete Agreements

On May 30, 2023, National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo issued a memorandum asserting that the “proffer, maintenance, and enforcement” of most non-compete provisions in employment contracts violate the National Labor Relations Act (NLRA). This memorandum follows on the heels of other recent efforts to curtail non-compete provisions, including the Federal Trade Commission’s proposed rule that—if enacted and thereafter successful in promised court challenges—would retroactively ban nearly all such provisions in employment agreements; a bipartisan Senate bill that would ban most non-compete provisions going forward; and a slew of recent state legislation making non-compete provisions more difficult for employers to enforce.

Read the full Alert on the Duane Morris LLP website.

Bipartisan Senate Seeks to Largely Eliminate Noncompete Agreements in New Bill

In the wake of the Federal Trade Commission’s (FTC) proposed regulation banning noncompete agreements except in limited circumstances, a bipartisan Senate group led by Democrat Senator Chris Murphy of Connecticut and Republican Senator Todd Young of Indiana introduced the Workforce Mobility Act of 2023 on February 1, 2023. If enacted, the legislation would effectively eliminate noncompete agreements entered into after the bill becomes law.

Read the full Alert on the Duane Morris LLP website.

FTC Proposes a Retroactive, Nationwide Ban on Non-Compete Clauses

Just one day after entering into consent agreements invalidating non-competes with three companies, on January 5, 2023, the Federal Trade Commission (FTC) proposed a new non-compete rule that would prohibit employers from entering into, maintaining, enforcing or threatening enforcement of a non-compete clause with virtually any worker and invalidate existing non-compete clauses with both current and former workers. If the non-compete rule is finalized by the FTC in the same or substantially same form as proposed, and if it survives the legal challenges that are sure to follow, the non-compete rule would make non-compete clauses an unfair method of competition under Section 5 of the FTC Act, regardless of inconsistent state statutes, regulations, orders or interpretations, and would represent a sea change in the law relating to non-compete clauses in the United States.

Rea the full Alert on the Duane Morris LLP website.

FTC Votes on Proposed Consent Orders Invalidating Noncompete Agreements of Three Companies

On January 4, 2023, the U.S. Federal Trade Commission (FTC) took legal action for the first time to prohibit the use of noncompete restrictions by three companies and their executives. In doing so, the FTC flexed its newly reestablished standalone authority under Section 5 of the FTC Act. In a partisan 3-to-1 vote, the FTC commissioners voted to issue administrative complaints and accept consent agreements that prohibit the firms and their executives from imposing, attempting to impose, enforcing or threatening to enforce noncompete agreements on a broad swath of covered workers. The orders also require the firms to provide written notice to the thousands of impacted workers that the noncompete agreements are null and void.

Read the full Alert on the Duane Morris LLP website.

FTC Expands Boundaries of What It Considers Unfair Competition Methods Under FTC Act Section 5

On November 10, 2022, the Federal Trade Commission (FTC) issued a policy statement that significantly expands the scope of what the FTC considers “unfair methods of competition” under Section 5 of the FTC Act (the “Policy Statement”). The announcement comes more than a year after the FTC rescinded its previous policy against pursuing “standalone” Section 5 Unfair Methods of Competition claims and interpreting Section 5 as coextensive with the Clayton and Sherman Acts. The Policy Statement appears to align with FTC Chair Lina Khan’s goal of increasing enforcement of conduct the FTC deems to be unfair regardless of whether it violates the Sherman and Clayton Acts.

Read the full Alert on the Duane Morris LLP website.

District of Columbia Walks Back Noncompetition Ban in Favor of Income-Based Threshold

In our Alerts published January 22, 2021February 17, 2021, and March 17, 2022, we detailed the Washington, D.C., Ban on Non-Compete Agreements Amendment Act of 2020. Among other provisions, had it taken effect, the 2020 Act would have rendered void and unenforceable any agreement prohibiting an employee from working for a competitor following employment and while the employee is still employed by the employer. The ban on so-called in-term restrictive covenants―standard provisions that prevent an employee from simultaneously working for a competitor of his or her employer―would have been the first of its kind.

Read the full Alert on the Duane Morris LLP website.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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