Effective July 1, 2025, Wyoming will restrict the enforceability of non-compete agreements. In enacting Senate Bill 107, Wyoming joins a growing list of states that have significantly restricted, or completely banned, non-compete agreements.Continue Reading Have Employees in Wyoming? Start Preparing for the Non-Compete Ban
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 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
Imagine paying millions to acquire a company only to later discover the restrictive covenants in the employment agreements of high-level executives were unenforceable. That’s precisely what happened in Intertek Asset Integrity Management. In Intertek, Texas’s Twelfth Court of Appeals held a company Vice President’s non-compete was unenforceable by the purchaser-entity because the underlying employment agreement lacked an assignment clause. Such language, if included, would have permitted the seller to transfer the contract’s rights and obligations without the employee’s consent. Assignability clauses are frequently buried in the “miscellaneous” section of agreements and—too often—omitted. Businesses who overlook these terms in Texas employment contracts do so at their peril.Continue Reading Missed Assignments: The Importance of Assignability Clauses in Restrictive Covenant Agreements
On January 5, 2023, the Federal Trade Commission (“FTC”) announced a broad proposed rule that would ban employers from imposing noncompete clauses on their workers. The FTC press release announcing the proposed rule states that noncompete clauses—which apply to about one in five American workers—suppress wages, hamper innovation, block entrepreneurs from starting new businesses and reduce American workers’ earnings between $250 billion and $296 billion per year.[1] The proposed rule would prohibit employers from: (1) entering into or attempting to enter into a noncompete with a worker; (2) maintaining a noncompete with a worker; or (3) representing to a worker, under certain circumstances, that the worker is subject to a noncompete. The term “worker” covers paid staff in addition to independent contractors and unpaid staff. The proposed rule does not apply to noncompete provisions imposed upon 25% owners of a business in transaction documents related to the sale of the business. The proposal is subject to a 60-day public comment period commencing when the Federal Register publishes the proposed rule.Continue Reading FTC Seeks to Ban Noncompete Agreements in Employment Contracts
Following a nationwide trend, New Jersey recently joined a growing list of states seeking to limit the use of non-compete and non-solicitation agreements by employers.Continue Reading What Employers Need to Know About Newly Proposed Non-Compete Legislation in New Jersey
Illinois recently passed legislation amending the Freedom to Work Act (the “Act”), following a growing trend of states imposing greater restrictions on employers’ use and enforcement of non-competition and non-solicitation covenants.
Continue Reading Illinois Imposes New Restrictions on Non-Competes and Non-Solicits
On August 13, 2021, Governor Pritzker signed into law a bill amending the Illinois Freedom to Work Act governing restrictive covenants and non-competition agreements. On May 30, 2021, the Illinois General Assembly passed a bill codifying existing noncompete law in some respects and modifying it in others. We detailed the Bill in a prior blog here. The Bill is now the law. The amendments become effective on January 1, 2022 and will not apply retroactively.
Continue Reading Illinois Governor Signs Non-Compete Legislation