Since its 1994, decision in Troupe v. May Department Stores Co., 20 F.3d 734 (7th Cir. 1994), the Seventh Circuit has instructed the district courts within its boundaries (including those in Illinois) to look for evidence that creates “a convincing mosaic of discrimination” in considering summary judgment motions in employment discrimination cases. After more
Hidden Pitfalls of Old Non-Compete Provisions
Companies and employers around
the country seek to protect their intellectual property by, among other things, using non-compete provisions in employment agreements. Generally, these provisions are intended to prevent an employee from soliciting or doing business with a former employer’s customer/clients over a set period of time and/or in regard to a set geographical area. Under California law, and specifically Business and Professions Code section 16600, such provisions are unenforceable unless they fall within one of the statutory exceptions, i.e., primarily in connection with the sale of a business interest. For years, although California state courts would refuse to enforce such provisions under section 16600, federal courts in California sometimes applied a narrow court-created exception and allow such provisions to be enforced provided that they were narrowly tailored as to time and geographical area. In 2008, the California Supreme Court unequivocally ruled that such provisions were unenforceable under section 16600 and rejected the “narrowly restricted” exception used by federal courts. (See Edwards v. Arthur Andersen, LP, 44 Cal.4th 937 (2008).)
In response to the Edwards decision, many California companies and employers began to omit such provisions from their new employment agreements or re-write them with specific language restricting an employee from using trade secret information to unfairly compete. However, other companies and employers left their old agreements untouched and in place thinking merely that they would not enforce them should the need arise. A recent court decision, Couch v. Morgan Stanley & Co., Inc. (E.D. Cal. Aug. 7, 2015), reveals the risk an employer or company faces in failing to update their older employment agreements to remove or revise such provisions.Continue Reading Hidden Pitfalls of Old Non-Compete Provisions
Are “No Rehire” Provisions in Settlement Agreements at Risk?
The use of “No Rehire” Provisions in settlement agreements between employers and their former employees allow employers to protect themselves against “boomerang” lawsuits. For instance, a former employee who claims he/she was terminated because of discrimination would be prevented from later submitting a new job application and then suing the employer again claiming he/she was not hired because of discrimination. This common provision is basically an agreement by the employee that in exchange for consideration, usually the payment of a sum of money, he/she will dismiss their claims against the employer and will contractually agree not to seek to be rehired. A recent decision from a panel of judges in the Ninth Circuit, however, has called the “No Rehire” provisions into question as possibly violating section 16600 of the Business and Professions Code.
In Golden v. California Emergency Physicians Medical Group, the plaintiff doctor sued after he lost emergency room privileges at one of CEPMG’s facilities. Prior to trial, the plaintiff doctor agreed to settle his claim for the payment of a large sum of money and initially agreed (at least orally through counsel) not to seek employment with CEPMG again. The “No Rehire” provision that was subsequently incorporated into a written settlement agreement provided that the plaintiff doctor would not seek re-employment with CEPMG and also provided CEPMG the right to terminate the plaintiff’s employment should he be working at any facility that it subsequently acquired. (CEPMG is a large consortium that manages or staffs many emergency rooms, in-patient clinics and other facilities in California and other Western states and intends to continue expanding.)
After the plaintiff doctor refused to sign the written settlement agreement containing the “No Rehire” provision, his former counsel filed a motion to enforce the settlement agreement (apparently to obtain his contingency fee from the settlement proceeds). The District Court concluded that the “No Rehire” provision was not a “non-compete” provision and therefore did not run afoul of section 16600. The Court ordered plaintiff to execute the written settlement agreement containing the “No Rehire” provision.
Continue Reading Are “No Rehire” Provisions in Settlement Agreements at Risk?
Tech Companies Reach New Settlement in Anti-Poaching Cases
This blog has previously reported on the anti-poaching cases involving various tech companies in Silicon Valley. The cases arise out of alleged agreements between various tech companies not to recruit each other’s employees. The U.S. Department of Justice brought antitrust actions as a result of these alleged agreements which resulted in the companies entering into
A Noncompete To Go With Your Sandwich?
A few months ago, this blog noted that there was press coverage about the nationwide increase in the use of noncompete agreements in various industries. A story that has made the rounds in the past week illustrates this point clearly. Jimmy Johns, a “gourmet sandwich” franchise, has apparently been inserting noncompete provisions in its employment