On April 23, 2024, the Federal Trade Commission voted 3-2 to approve a final rule banning all employee noncompetition agreements nationwide. The rule, currently set to go into effect 120 days after publication in the Federal Register (except for the notice provision which is effective earlier), is the result of the FTC’s position that
FTC Proposes Banning Noncompetition Agreements with Employees
On January 5, 2023, the Federal Trade Commission (FTC) issued Notice of Proposed Rulemaking announcing that it was proposing an administrative rule that would end the use of all noncompetition agreements in employment relationships outside the context of the sale of a business. The proposed rule, among other things, labels the following as unfair methods
El Paso Court of Appeals Clarifies Fiduciary Duty At-Will Employees Owe to Employers
In Texas, absent a valid noncompete, an at-will employee is generally free to compete with the former employer so long as the employee does not take or use the company’s confidential information or trade secrets. Notwithstanding this general rule, employees also have common law fiduciary duties that limit what activities they can engage in prior to resigning employment. The level of fiduciary duty owed to the company will depend on the duties and responsibilities of the employee and the position within the company. Employees may generally make preparations to compete while still employed by a company but cannot actively compete while still employed. What constitutes preparing to compete versus actively competing can often be a blurry line. A recent case from the El Paso Court of Appeals helps to bring the line into focus.
Continue Reading El Paso Court of Appeals Clarifies Fiduciary Duty At-Will Employees Owe to Employers
DOJ to Criminally Prosecute Employers and Individuals that Reach Hiring and Wage Agreements under Federal Antitrust Law
At the end of October, the U.S. Department of Justice Antitrust Division (DOJ) and Federal Trade Commission (FTC) communicated a significant shift in their enforcement guidance regarding competition among employers to limit or fix terms of employment for potential hires. In a new publication, Antitrust Guidance for Human Resource Professionals, the DOJ announced its
New Developments in Employee Hiring and Noncompetition
Last week brought several interesting developments on the issue of restrictive covenants and hiring of employees among competitors including 1) the White House’s call to action (CTA) for the States to restrict use of covenants not to compete; 2) the Department of Justice’s announcement that it intends to criminally prosecute employers and executives entering into
Texas Supreme Court Holds that Forfeiture Provision In Incentive Plan Not A Noncompete
I wrote about the case of Drennen v. Exxon Mobile over a year ago. Drennen was the case of the Exxon executive who forfeited millions of dollars in incentive compensation when he left Exxon to work for a competitor. You can read the background of the case here. Today, the Texas Supreme Court held that a forfeiture clause
Court Holds that Reasonableness of Physician Buy-Out Clauses in Noncompetition Agreements Can be Challenged Even When Parties Previously Agreed to Amount
I have written several posts outlining the unique requirements that employers must include to create a valid noncompeteition agreement with a physician. (posts here and here). A recent case from the Beaumont Court of Appeals holds that even when a physician noncompetition agreement contains a reasonable buy-out clause, the employer may still have to arbitrate the
U.S. Supreme Court Holds that Arbitrator, Not State Court, Must Determine Enforceability of Noncompetition Agreement
In a per curiam opinion, the U.S. Supreme Court held that under the Federal Arbitration Act arbitrators, not courts,must determine the enforceability of covenants not to compete when the parties are subject to agreements that call for the mandatory arbitration of disputes.
In Nitro-Lift Technologies v. Howard, two employees left their employment with Nitro-Lift and began
Court Holds Forfeiture Provision in Executive Stock Incentive Program Unenforcable Noncompete
Covenant not to compete cases normally arise when an employer seeks to enforce a restrictive covenant by having a former employee enjoined from breaching the covenant and working for a competitor. They can also arise when the employee is not expressly prohibited from competing, but is subjected to severe economic penalty if he engages in
Antitrust Concerns Raised When Competitors Get Too Cozy
When competitors make agreements with one another about what they will charge, the territories they will divide, the customers each will sell or the employees they will hire, red flags should raise because antitrust issues may be implicated. Last year I wrote about the settlement several Silicon Valley technology companies reached with the US Department