Restrictive Covenants

ATS Tree Services, LLC (“ATS”) has voluntarily dismissed the lawsuit it filed in April 2024 in the U.S. District Court for the Eastern District of Pennsylvania challenging the Federal Trade Commission’s (“FTC”) Non-Compete Clause Rule (“the Final Rule”), which banned the use of most non-compete clauses in employment contracts.

The dismissal comes after the U.S.… Continue Reading

Summary

What’s next for employers who want to protect their businesses from competition from departing employees, including the loss of customers, employees, and confidential information? With a federal court injunction against the Federal Trade Commission’s (FTC) Final Rule banning noncompetes, the door is open for employers to continue using them. But companies now have time to reflect on the increasing hostility of courts and legislatures towards overly broad restrictive covenants, update their existing agreements, assess which employees ought to be subject to post-employment covenants, and determine how to best protect their trade secrets and confidential information.… Continue Reading

On August 20, 2024, Judge Ada Brown of the U.S. District Court for the Northern District of Texas vacated the Federal Trade Commission’s (FTC) final Rule that the FTC enacted to ban noncompete agreements.  Judge Brown held that the FTC exceeded its statutory authority and invalidated the Rule on a nationwide basis.… Continue Reading

Minnesota Governor Tim Walz has signed into law three bills that create new obligations for Minnesota employers.

First, on May 24, 2023, Governor Walz signed a labor appropriations bill prohibiting the use of covenants not to compete against Minnesota employees and employers, with very limited exceptions involving the sale or dissolution of a business.… Continue Reading

In May 2022, Colorado legislators passed a law that bans employee non-compete clauses for workers making less than six figures annually.  Governor Jared Polis (D) signed the bill into law on June 8, 2022, giving it an effective date of August 10, 2022.

In short, HB 22-1317, imposes an income-based minimum on enforceable non-compete agreements between employers and employees. … Continue Reading

Labor and Employment partner David Fryman leads a conversation on employment restrictive covenants. Joining David are Juliana van Hoeven and Elliot Griffin, associates in the group. Together, David, Juli, and Elliot, review a number of important points regarding restrictive covenants: including the circumstances that make the use of restrictive covenants advisable or not, what’s required to make them enforceable and how that can vary from state to state, and the impact of the COVID-19 pandemic on enforcement.… Continue Reading