For many workers, signing an employment contract with a confidentiality, non-disclosure, non-competition, or non-solicitation clause is a necessary part of accepting and keeping a job. What they don't anticipate, however, is that those provisions can be leveraged against them to restrict employees' rights to challenge unlawful practices and find other work, placing their livelihoods and future employment in jeopardy.
In apparent support of U.S. workers and economic realities, the Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently issued guidelines for human resources professionals regarding anti-competitive hiring practices.
In a civil complaint filed June 8, 2016, the State of Illinois alleges that the sandwich chain Jimmy John's violated the state's Consumer Fraud and Deceptive Practices Act, 815 ILCS 50511, et seq., by requiring its store employees to sign aggressive non-compete agreements.
This May, the Obama Administration released a report analyzing the use of non-compete agreements in the American economy, potential issues arising from such use, and the effectiveness of various state responses. This analysis suggests that the misuse of non-competes at various occupational levels places an unnecessary burden on employees, consumers, and the economy.
A New York trial court recently addressed the issue of adequate consideration for a noncompete, finding that now-lapsed stock options were not adequate consideration, nor was continued employment where the agreement stated that the employer maintained the right to terminate the employees at will.
"Can my employer really enforce this noncompete?" -- this is a question routinely posed to employment lawyers. The answer depends on many factors. First and foremost, it depends on which state's law will be applied to the noncompete. The answer to that question might seem obvious initially, since most employment agreements and separation agreements contain a choice-of-law clause designating a particular state's law to apply to disputes. One might think that if the agreement designates a state that generally enforces noncompetes, the noncompete will be enforceable and the employee is out of luck. But the issue is not always that simple.