New Illinois law bans noncompetition agreements for low-wage workers

December 21, 2016 0 COMMENTS

by Steven L. Brenneman

The Illinois Freedom to Work Act, which will ban noncompetition agreements for low-wage private-sector employees, goes into effect on January 1.

The law defines a “low-wage employee” as an employee who earns the greater of the applicable federal, state, or local minimum wage or $13 per hour. Therefore, the law initially will apply to noncompetition agreements with employees earning $13 per hour or less.

The law defines “covenant not to compete” broadly to mean an agreement between an employer and a low-wage employee that restricts the employee from performing: read more…

Utah law puts new limits on noncompete agreements

May 04, 2016 0 COMMENTS

by Ryan B. Frazier

A new law passed by the Utah Legislature and signed by Governor Gary Herbert places new restrictions on noncompetition agreements signed after May 10.

All requirements imposed under common law not specifically changed by the new law are still applicable, meaning that noncompetition agreements must protect a legitimate business interest of the employer and must be reasonably limited in geographic scope.

The primary change is the creation of a statutory limitation on the duration of a covenant not to compete. Under the new law, an employer and an employee cannot enter into a noncompetition agreement that lasts more than one year from the date the employee is no longer employed by the employer.

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New Alabama noncompete law starts in January

November 30, 2015 0 COMMENTS

by Al Vreeland

A bill signed into law over the summer will significantly strengthen Alabama employers’ ability to enforce noncompete agreements when the law takes effect January 1, 2016.

The state’s old noncompete statute makes a broad statement that noncompete agreements are void. It then creates several exceptions into which courts have shoehorned the modern version of the noncompete.

Alabama courts have generally stated that noncompetes are disfavored, but they can be enforced when they are related to a legitimate interest (e.g., protecting customer relationships or proprietary information) and are reasonably limited in time and geographic scope. That formula gave an enormous amount of discretion to judges to decide whether noncompetes would be enforceable and left employers with uncertainty.

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Illinois court makes noncompete agreements harder to enforce

June 26, 2013 0 COMMENTS

by Steven L. Brenneman

In a decision handed down June 24, the Illinois Appellate Court, First District, found a restrictive covenant unenforceable because of a lack of adequate consideration (something given in return for the employee’s agreement not to compete). The court ruled there must be at least two years of continued employment to constitute adequate consideration to support a restrictive covenant. Although this isn’t the first time an Illinois court has ruled that two years of employment are necessary, the ruling in this case is remarkable because of the following:

  • The employee signed the restrictive covenant at the time he commenced employment, yet the court rejected the employer’s argument that the employment offer itself was adequate consideration.
  • The restrictive covenant was the product of negotiations between the employee and the employer and included a proviso that the nonsolicitation and noncompete provisions wouldn’t apply if the employee was terminated without cause during the first year of his employment. Yet the court found this protection was insufficient consideration.
  • The employee voluntarily resigned after three months’ employment, but the court relied on previous decisions holding that an employee’s voluntary resignation, as opposed to an involuntary termination, makes no difference to the consideration analysis.

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New Oklahoma law confirms enforceability of nonsolicitation agreements

May 15, 2013 0 COMMENTS

Although noncompetition agreements remain unenforceable under state law, a new law confirms that Oklahoma employers may enforce agreements prohibiting former employees from soliciting a company’s employees to leave their jobs to work for another employer.

For some time, Oklahoma employers have been able to contractually prohibit former employees from soliciting workers for a reasonable period of time, but Senate Bill 1031 confirms and reinforces such prohibitions by codifying that a nonsolicitation provision is not an unlawful restraint of trade. Under the law, employers may have contracts that prohibit employees or independent contractors from directly or indirectly soliciting employees or contractors to become employees for another organization.

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Supreme Court ruling bolsters use of mandatory arbitration

November 29, 2012 0 COMMENTS

by Charles S. Plumb

Employers requiring employees to submit disputes to mandatory arbitration rather than filing a lawsuit got a boost from a November 26 U.S. Supreme Court ruling in an Oklahoma case.

In the case, two employees of Nitro-Lift, a provider of services to oil and gas well operators, left their jobs to work for a competitor. The two had signed confidentiality and noncompetition agreements that included a clause requiring the parties to submit disputes to mandatory arbitration.

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