Employment Agreements

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The New York Legislature is set to make another attempt to ban non-competes for all but highly compensated individuals. At the end of the 2023 legislative session, the New York Legislature passed a bill that would have banned non-compete agreements for all employees regardless of wage or income level. Governor Kathy Hochul vetoed this bill while expressing her support for a more limited ban stating that she wanted to “strike a balance” between protecting middle-class and low-wage workers and “allowing New York’s businesses to retain highly compensated talent.”Continue Reading New York Legislature Proposes New Bill Banning Non-Compete Agreements

California’s Private Attorneys General Act (PAGA)[1] allows “aggrieved employees” to sue their employers for Labor Code violations to collect civil penalties “on behalf of himself or herself and other current or former employees.” The issue of how to resolve PAGA claims where the employee and employer are subject to a binding arbitration agreement has been hotly contested over the last several years, as reported many times in this blog [see here, here, and here].Continue Reading PAGA Plaintiffs Cannot Avoid Arbitration by Bringing a “Headless PAGA Lawsuit”

As previously reported (here and here), some Delaware courts have recently declined to “blue pencil,” i.e., modify and narrow overbroad restrictive covenants. Instead, they have stricken in their entirety covenants deemed overbroad and declined to enforce them. On December 10, 2024, in Sunder Energy, LLC v. Tyler Jackson, et al., the Delaware Supreme Court affirmed that Delaware courts have the discretion to decline to blue pencil overbroad restrictive covenants, even if the defendant’s conduct would violate a more narrowly circumscribed covenant. Continue Reading Delaware Supreme Court Refuses to Enforce Noncompete Against Company Founder Who Joined Competitor

Washington Governor Jay Inslee recently signed Senate Bill 5935 into law, amending and expanding Washington’s statute restricting the enforceability of noncompetition covenants (Revised Code of Washington 49.2). The amended statute, effective June 6, 2024 and enacted to “facilitat[e] workforce mobility and protect[] employees and independent contractors,” follows a growing trend among states restricting the enforceability of noncompetition covenants and creates additional considerations for employers entering into non-compete agreements with Washington-based employees.Continue Reading Washington’s Amended Non-Compete Law Creates New Considerations for Employers

On May 10, 2024, the Ninth Circuit decided Yuriria Diaz v. Macy’s West Stores, after the employer appealed the district court’s decision ordering arbitration of both an employee’s individual and non-individual claims under the California Private Attorney Generals Act (PAGA). The Ninth Circuit held that even though the arbitration agreement made no mention of PAGA, an employee’s individual PAGA claim was still subject to arbitration because the parties’ intended to arbitrate all employment disputes between them. However the non-individual PAGA claims were not arbitrable, because the parties did not consent to arbitration of those claims. Continue Reading Ninth Circuit Rules That Only Individual PAGA Claims Can Be Compelled to Arbitration

On April 23, 2024, the Federal Trade Commission (“FTC”) issued its Final Rule banning employers from imposing post-employment noncompete requirements on their workers (the “Final Rule”). The FTC has indicated that it will continue to prioritize enforcement in the healthcare industry, with objectives seeming to include alleviating physician shortages and improving access to healthcare. What the Final Rule means for healthcare organizations generally, and for nonprofits in particular, is not entirely clear and is likely to be challenged. Continue Reading What the FTC’s Noncompete Ban Means for Healthcare

On April 23, 2024, the Federal Trade Commission (the “FTC”) voted 3-2 to issue its final rule (“Final Rule”) banning employers from imposing noncompete clauses on their workers, approving the final rule in a special Open Commission Meeting. Continue Reading FTC Votes to Ban Noncompete Agreements

In Cantor Fitzgerald, L.P. v. Ainslie, No. 162, 2023, 2024 WL 315193 (Del. Jan. 29, 2024), the Delaware Supreme Court held enforceable a “forfeiture for competition” provision in a limited partnership agreement, upholding “the freedom of contract” and enforcing “as a matter of fundamental public policy the voluntary agreements of sophisticated parties.” Given Delaware’s recent shift from its typically non-compete friendly stance, the Delaware Supreme Court’s ruling is beneficial for employers.Continue Reading Delaware Supreme Court Enforces Forfeiture for Competition Provision in Partnership Agreement

In the past few months, California Governor Newsom has signed numerous new employment laws affecting California employers of all sizes. Below is a summary of some of the laws going into effect in 2024.Continue Reading Looking Ahead: New California Employment Laws for 2024

On September 15, 2023, New York Governor Kathy Hochul signed a law that made dramatic changes to the enforceability of invention assignment provisions in employment agreements and likely in related agreements including offer letters and Confidentiality, Information and Invention Assignment Agreements (CIIAAs). The law took effect immediately and adds New York to a growing list of states with laws placing limits on invention assignment provisions.Continue Reading Necessity Is the Mother of Invention – But New York Law Says Employers Better Not Take the Credit

California has passed two new items of legislation, Senate Bill 699 and Assembly Bill 1076, which will further regulate and restrict the enforcement of employment non-compete agreements in California, and expand the scope of remedies for those affected by them. These new laws will become effective on January 1, 2024, and now is the time for employers to assess and revise their employment-related agreements and restrictive covenants accordingly. As detailed below, they also require employers to notify employees and certain former employees by February 15, 2024 that certain non-compete provisions are void. The two new laws are detailed below.Continue Reading California Strengthens Non-Competition Law