As I’ve mentioned before, our firm has been producing a series of free webinars covering various employment law topics our clients have asked us to talk about. You can watch any of our recorded webinars and find more information about our upcoming presentations here.
I recently presented with my colleagues Sarah Niemiroski and Sheridan King on restrictive covenants — everything from non compete provisions to non-solicitation clauses and more.
I won’t rehash the entire discussion but I want to emphasize three takeaways from our presentation:
1) The ground is shifting in this area in ways we really haven’t seen for some time. Increasingly, restrictive covenants are under attack from not only the courts but from legislatures too. Massachusetts for example has greatly restricted the use broadly of non competes. In Connecticut, non-competes are banned in certain industries like security guards or broadcast employees.
You may think that you only have to worry about the state your business is located in but with employees working remotely entirely you now have to worry about those states as well. Don’t expect choice of law provisions to save you; those may not be enforceable in some jurisdictions like Washington.
So any drafting has to be done with an awareness of current surroundings.
2) But beyond the current law, drafting also involves a bit of forecasting too. What will the world of employment law look like in 5 years when you might need to enforce it?
By that measure, it seems likely that broad clauses may not necessarily be enforced in the future (as they might have been 10 years ago). And no hire clauses (versus non-solicitation) provisions may not pass muster under some of the bills being considered in some jurisdictions. I’ve previously discussed these anti-poaching provisions in a prior post.
3) Thus any drafting of restrictive covenants now should be an exercise in making clear definitions. If you want to enforce a non compete, what specific business are you trying to protect? If you’re a manufacturer of airplane tool parts, who are your biggest competitors? What is the necessary geography? What time-frame is most explainable?
Too often companies are operating on cruise control, renewing the same agreements from 2002 twenty years later.
But the world has shifted and it’s important to keep up with it. Perhaps you won’t update the agreement now but a review of your agreements means at least you’ll have a better understanding of your risk tolerance.