Restrictive Covenant Laws at the Federal and State Level Increase Challenges of Enforcing Non‑Compete Agreements (Part Two of Two)

Employers were generally reluctant to enforce non-compete and other restrictive covenants against employees in the midst of the coronavirus pandemic when the unemployment rate was in double digits. Recently, however, there has been a resurgence in employers ensuring their non-compete and non-solicit provisions are enforced. At the same time, a patchwork of legal requirements is emerging from legislation and court holdings in various jurisdictions. For fund managers to comply with the relevant laws, they need to be aware that one size will not fit all employees across the U.S. The laws do, however, consistently attempt to balance, on one hand, employer concerns with protecting trade secrets, safeguarding confidential information and preventing unfair competition and, on the other hand, employees’ rights to earn a livelihood. Those issues were addressed in a Proskauer webinar featuring attorneys Guy Brenner and Daryl G. Leon. This second article in a two-part series identifies federal trends relating to restrictive covenants; how multiple states are handling choice of law provisions; and the treatment of restrictive covenants for low wage and other employees. The first article tracked the advancement of legislation targeting non-compete agreements in Illinois and Washington, D.C. See “Delaware Chancery Court Strikes Down Employee Restrictive Covenants in a Partnership Agreement” (Mar. 16, 2023).

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