As in most states, the enforceability of restrictive covenants or non-compete clauses in the Fifth Circuit turns primarily on the reasonableness of the restriction’s geographic and temporal scope. Louisiana and Texas have enacted statutes explaining when non-competes may be enforced. But in Mississippi, enforcement is determined entirely by common law, and courts will consider the
A Nail in the Coffin? Another California District Court Finds That Employee Non-Solicitation Agreements Are Void Under California Law
A federal district court in San Jose recently ruled, in WeRide Corp., et al. v. Kun Huang, et al., that employee non-solicitation agreements are “void” under California Business & Professions Code section 16600 because such agreements are an invalid restraint on employment. This is the second federal court opinion this year that has barred
Restrictive Covenants in the Third Circuit
In the Third Circuit, common law generally governs the use of restrictive covenants. States in this Circuit employ a reasonability standard to determine whether a restrictive covenant is enforceable. In New Jersey, even if a covenant is found to be reasonable, it may be limited in its application by: geographical area, period of enforceability or
Restrictive Covenants in the Seventh Circuit
States within the Seventh Circuit employ the reasonability standard used in many other circuits to determine whether a restrictive covenant is enforceable. Two of these states, Illinois and Indiana, apply a common law framework but largely disfavor such covenants as a restraint on trade. Wisconsin’s restrictive covenant statute focuses on the reasonableness of the agreement
Restrict Covenants in the Eleventh Circuit
Each of the states within the Eleventh Circuit governs the use of restrictive covenants through statutes. Generally, both Florida and Alabama permit the use of restrictive covenants where the restrictive covenant is “reasonably necessary” to protect a legitimate business interest, but the legitimate business interest requirement is applied differently in both jurisdictions. Alabama law prohibits
Restrictive Covenants in the Second Circuit
Unlike in the Ninth Circuit, in states comprising the Second Circuit, common law generally governs the use of restrictive covenants. Still, many of the specific factors for analysis in these states will be familiar, given the widely accepted “reasonability” standard for adjudicating the propriety of such agreements. Both the Vermont and N.Y. State Legislatures have
California’s Restrictive Covenant Statute an Outlier in the Ninth Circuit?
We recently shared a California federal court decision in Barker v. Insight Global, LLC, et al. that relied on Section 16600 of California’s Business and Professional Code to hold that, in California, non-solicitation provisions in employee agreements are presumptively invalid. The California statute governing restrictive covenants provides that “[e]xcept as provided in this chapter, every
Please Join Us for a Crowell & Moring Webinar: New Year, New Look at the Enforceability of Employee No-Solicitation Agreements – State Law Developments
Please join us for a Crowell & Moring webinar, “New Year, New Look at the Enforceability of Employee No-Solicitation Agreements – State Law Developments,” scheduled to take place on February 28th, 2019 at 12:00 pm Eastern.
Employers frequently enter into restrictive covenants with their employees, including those that prohibit former employees from recruiting other employees