Looking for an update on non-compete law?

The law governing non-competes varies from state to state, and new legislation has brought the federal government into the mix. A recent article provides a helpful overview of the changing legal landscape covering these litigious covenants. Topics include,

  • An overview of new legislation in multiple states;
  • A look at recent court decisions including on the following topics:
    • Blue-penciling, aka judicial modification of a contract, such as a Nevada decision, Golden Road Motor Inc., Inc. v. Islam, 376 P.3d 151 (2016) (Nevada courts decline to re-write non-compete agreements if a part is unlawful),
    • Consideration, specifically whether continued at-will employment constitutes valid consideration for a non-compete agreement, and
    • What employer interests, such as trade secrets, are sufficient to support non-compete agreements;
  • 2016’s Defend Trade Secrets Act (DTSA), the nation’s new federal law addressing these agreements.

As many articles have reminded employers, DTSA now requires employers to include a disclaimer that advises  employees who sign such agreements they may still complain to the government and cooperate in government investigations. (Note that is a simple summary of DTSA, but specific requirements should be met in the language of that disclaimer.) The penalties for not including a DTSA disclaimer include limitations on remedies, such as the inabilty to obtain attorney fees and punitive damages. Employers should consult with legal counsel about DTSA and whether to include a disclaimer in current and future agreements.

Source: Beyond the Red-Blue Divide: An Overview of Current Trends in State Non-Compete Law : Publications : The Federalist Society

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