Category Archives: Noncompete Restrictions

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McDonald’s Fired CEO’s Non-Compete Restriction – Should Employer’s Love it?

McDonald’s recently announced it terminated its chief executive, Steve Easterbrook, for having a consensual relationship with an employee. This termination presents a buffet of employment law and HR issues upon which one could devour. However, I want to focus on the non-compete restriction that Mr. Easterbrook ultimately agreed to upon ending his employment. The Background for … Continue Reading

The Shakey Foundation for Continued Employment as the Basis for Non-compete Enforcement

Is “continued employment” sufficient “consideration” to support the enforcement of a non-compete agreement? It is an issue present in many non-compete disputes. But it is also an issue that may be overlooked or (incorrectly) assumed to be a “non-issue.” If you need a refresher course on what consideration is and why it matters, we’ve got you … Continue Reading

Michigan’s Attorney General Recommends More Scrutiny for Enforcing Noncompete Restrictions

Michigan’s Attorney General (AG) Dana Nessel joined 17 other State Attorneys General to respond to the Federal Trade Commission’s (FTC) request for public comments. These comments concern the FTC’s public hearings on Competition and Consumer Protection in the 21st Century. Ms. Nessel’s response echoes a growing concern across the United States about the use and … Continue Reading

Companies Should Already be Doing What Oregon’s Amended Non-compete Law Requires

A recent non-compete related law in Oregon caught my attention. Specifically, Oregon law (HB 2992), provides that noncompete agreements entered into after January 1, 2020, will only be enforceable against Oregon employees if the employer provides the departing employee with a signed copy of the agreement within 30 days after the employee’s date of termination. … Continue Reading

Employees Are Winners in Push-Back Against Non-compete Restrictions

Push-back by State Attorney Generals and state lawmakers against n0n-compete agreements may mean improved wages for employees. Specifically, the Wall Street Journal, by Harriet Torry, reported on May 18, 2019, that Resistance to Noncompete Agreements Is a Win for Workers. To support this conclusion, the WSJ article cited various state initiatives, including: Washington passing a law making … Continue Reading

Is Interference from Over Agressive Noncompete Litigation to Blame for Slow Wage Growth?

Despite a strong jobs report on May 3, 2019, wage growth continues to be a disappointment. See Axios post, “The Mystery of Sluggish Wages.” I don’t have all the answers, but I can point to at least a partial explanation for this mystery; the employment market is often contractually rigged by employers using overbroad contractual … Continue Reading

Inconsistent Non-compete Restrictions Limits Employer’s Protections

A common mistake employers make in protecting their business interests is poorly drafted non-compete agreements. And frequently that mistake involves drafting inconsistencies. As explained below, inconsistencies provide a foundation for challenging the scope or outright enforceability of a company’s non-compete restriction. In this regard, we recently defended against Christian Financial Insurance/Christian Insurance Group, Inc.’s motion … Continue Reading

WeWorks Settles Investigation of Overbroad Noncompete Restrictions

The office share company WeWork Cos. reached a settlement with attorneys general of New York and Illinois over requiring most employees to sign over-broad noncompete agreements. The Wall Street Journal, by Eliot Brown, reported that WeWork previously required most employees, including baristas and receptionists, to sign agreements barring them from working at similar businesses for … Continue Reading

FTC Considers Restricting Noncompete Agreements

Will the playing field be leveled between employers and employees when it comes to non-compete agreements? Perhaps if anything comes out of the Federal Trade Commission’s (FTC) hearings held last 9/13 and 9/14, which focused on how the agency’s competition and consumer protection approaches are working. One area of focus is whether enforcement practices need to … Continue Reading

Learning from this Company’s Mistake: Don’t Mishandle Employment Agreements

An interview with a successful CEO offers business owners a chance to learn from a costly mistake involving employment agreements. This mistake could have doomed her company before it became a billion-dollar business. Specifically, Therese Tucker is the CEO of BlackLine, which provides automated finance and accounting software. She also founded BlackLine and brought it public. … Continue Reading

Geography Increasingly Complicates Resolution of Non-compete Disputes

On January 8, 2018, the U.S. Supreme Court declined to consider an appeal from a former Stryker Corp. sales representative. The appeal arose from a case involving a non-compete agreement between a Louisiana employee and a Michigan employer. The non-compete agreement contained a forum-selection clause stating that any dispute arising out of the agreement must … Continue Reading

Before Accepting a new Position, are you Required to Sign a Non-compete Agreement?

A former employee recently sued MedMar Inc. and its related companies. The suit, Greenswag v MedMar Inc., pending in the Cook County Circuit Court, alleges the defendants made misrepresentations about the employment opportunity to induce him to sign a non-compete restriction. I haven’t reviewed the complaint, but these sorts of claims are often unsuccessful. This is … Continue Reading

When it Comes to Enforcing a Noncompete Agreement is Timing Everything?

A recent noncompete case from Minnesota offers a cautionary tale for employers and cause for celebration for employees. The case, Safety Center, Inc. v. Stier, (11/6/17), involved an employer that ran a treatment center for special-needs sex offenders. The employer sought to enforce its noncompete agreement against a former program director (Stier). The noncompete agreement … Continue Reading

Changes to the Michigan Business Court

Amendments to the Michigan Business Court Statute go into effect today, October 11, 2017. These amendments primarily focus on clarifying the cases that are to be assigned to business courts. Also, the statute was amended to clarify a Business Court’s jurisdiction to hear business disputes involving equitable or declaratory relief. The amendment now clarifies that … Continue Reading

Revising Non-compete Law to Eliminate Unfair Competition

Non-compete agreements are intended to prevent unfair competition. But they often create unfair advantages against employees and start-ups. And these unfair advantages adversely affect individuals and the overall economy. At least that is the take-away from a recent op-ed in the New York Times. Noncompete Restrictions and the Economy Specifically, Prof. Orly Lobel wrote in Companies Compete but … Continue Reading

An Employer’s First and Best Line of Defense to Discrimination Claims

A recent Michigan Court of Appeals decision highlights the important role employment agreements can play in defending against employment discrimination lawsuits. Specifically, in Sams v Common Ground, when William Sams was hired by Common Ground he signed an employment contract. In that contract, Sams agreed that he would not sue the company one year after … Continue Reading

Noncompete Litigation Between Papa John’s and Panera – Lessons For Protecting Competitive Advantages

Earlier this month a federal district court judge entered a temporary restraining order (TRO) against a former Panera executive and his new employer, Papa Johns. The TRO arose out of a lawsuit to enforce the former Panera executive’s non-compete agreement. That agreement restricted him from competing against Panera for one year after his employment ended. … Continue Reading

Buying or Selling a Business? Don’t Forget to Consider Employment and Non-compete Agreements.

The decision to sell a company involves many considerations. One important – but often overlooked – consideration is the value that should be derived from having enforceable employee and non-compete agreements. However, all too often, due diligence fails to critically assess the enforceability or transferability of non-compete restrictions. As discussed below, the value of the … Continue Reading

Four Take-Aways from an Employer’s Misuse of Overly Broad Noncompete Agreements

Using a broad brush to draft noncompete agreements that are applied universally to a company’s workforce is increasingly coming under fire. And this exposes companies to unnecessary litigation risks, as well as legal fees associated with enforcement costs. Employer Abuse of Noncompete Restrictions A recent example of involves Law360 and its settlement with the New … Continue Reading

Noncompetition Agreements – Impediment to Employee Mobility and Innovation?

The Wall Street Journal, by Aruna Viswanatha, recently asked whether Noncompete Agreements Hobble Junior Employees. Spoiler alert — they do. According to the Journal: Noncompete agreements—common in computing and engineering jobs, where proprietary technology can be at stake—are spreading to other industries and stretching further down the corporate ladder. Labor-law experts say some employers appear … Continue Reading
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