Trade Secrets and Restrictive Covenants

Read this before you ask an entry-level worker to sign a non-competition agreement

October 15, 2014 | by Eric B. Meyer

My Facebook and Twitter feeds were blowing up yesterday with links to articles at NYTimes.com, Huffington Post, and Jezebel about how the sandwich chain, Jimmy John’s, supposedly makes its sandwich makers and delivery drivers sign these non-competition agreements. These agreements purport to preclude employees from working for certain nearby competitors for two years after their employment with Jimmy John’s ends.

Now, I know what you’re thinking…

That Meyer has the coolest Facebook and Twitter feeds evah! How can I get with him? (Well, here’s how you can get with me next month, but I digress).

I’m not going to comment specifically on Jimmy John’s and its purported practice other than to say that I work in Philadelphia and it would be sacrilege to let a “sub sandwich” pass between these lips. But, after the jump, I do have a few general pointers from employers about restrictive covenants…

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PA Superior Court closes non-competition-agreement loophole

May 15, 2014 | by Eric B. Meyer

In Pennsylvania, a company and an employee can enter into an agreement whereby, in exchange for some form of consideration, the employee agrees not to compete with the company after the employment ends.

Consideration can come in a variety of forms; for example, a raise, bonus, promotion, or ~~sugar~~. Initial employment can also be sufficient consideration.

However, in Pennsylvania, continued employment won’t cut it. That is, a non-competition agreement will be invalid if an employee signs it after commencing employment — even if you tell the employee that he/she will lose his job by not signing.

No non-compete in the offer letter, but here’s a way to enforce one…

July 1, 2013 | by Eric B. Meyer

You’re hiring for an engineer position. To assist, you engage a search firm, which finally locates an ideal candidate. After a telephone conversation, and a subsequent tour and in-depth interview, you know that you have the right person for the job. So, you prepare and send an offer letter.

The offer letter includes a summary of the position, responsibilities, location, base salary, benefits, effective date, and confidentiality. The letter also states: “You will also be asked to sign our employment/confidentiality agreement. We will not be able to employ you if you fail to do so. In addition, the first day of employment you will be required to sign an Employment Agreement with definitive terms and conditions outlining the offer terms and conditions contained herein.”

The offer letter does not contain any mention of a non-competition agreement.

Employer customer lists: “Whatever you say, dude.”

June 25, 2012 | by Eric B. Meyer

You’re looking to hire a new salesperson. Scott Salesperson comes in to interview. He currently works for your top competitor.

“Scott, do you have a non-competition agreement?”

“No.”

“Scott, do you have a confidentiality agreement?”

“No. In fact, I have a list of my own customers that I could sell to if you hire me.”

Sounds good, right. But, before hiring Scott, do you have any obligation to independently verify the facts that Scott has represented?

New Jersey employers will definitely want to click through because, last week, the New Jersey Supreme Court answered…

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Do your confidentiality agreements pass muster with the NLRB?

April 12, 2012 | by Eric B. Meyer

Last week, Jon Hyman at the Ohio Employer Law Blog was on point with this good post discussing a recent National Labor Relations Board Administrative Law Judge decision. The case involved what the NLRB General Counsel believed was an overly-broad social media policy in two regards:

It banned employees from using social media to comment on work-related legal matters; and

It required company-permission be given before employees post images/video online.

Make sure to read Jon’s post for the full-scoop. I promise not to give away the ending (until later in this post, when I give away the ending). But, after the jump, I’m going to examine another aspect of the case; namely, a confidentiality provision that the ALJ deemed overly broad. I’ll also add a few ideas for you to keep your confidentiality provisions compliant with the National Labor Relations Act.

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NJ officially adopts the Trade Secrets Act

January 20, 2012 | by Eric B. Meyer

As reported here in September, the State of New Jersey was recommending passage of the New Jersey Trade Secrets Act.

Well, welcome to the party, pal. (Or is it Powell?). Last week, NJ became the 47th state to adopt a version of the uniform trade secrets act as Governor Christie signed the NJTSA into law. The new law provides for both legal relief (damages for actual loss an unjust enrichment, punitive damages, attorney’s fees) in the event of an actual misappropriation of trade secrets, and injunctive relief should there be an actual or threatened misappropriation.

https://www.youtube.com/watch?v=qHm9MG9xw1o

Who owns the LinkedIn account you maintain for an employee?

January 5, 2012 | by Eric B. Meyer

powered by Fotopedia

Yesterday, we looked at a recent federal-court decision to determine whether LinkedIn connections are considered trade secrets. Today, after the jump, we look at whether your business has any protectible interest in a LinkedIn account that you create and maintain for your employees.

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Are employees’ LinkedIn contacts considered your trade secrets?

January 4, 2012 | by Eric B. Meyer

Over the past several weeks, you probably read about this case involving a company suing one of its former employees whom it alleges misappropriated a Twitter account and, along with it, 17,000 Twitter followers that the company believes it owns. A video about the case follows below:

https://www.youtube.com/watch?v=3hV2lCnG5VA

A fight over LinkedIn connections.

Your [trade] secrets are safe with NJ…almost.

September 22, 2011 | by Eric B. Meyer

Raise your hand if your state has adopted a Uniform Trade Secrets Act — a law that affords companies an additional layer of protection by providing for civil remedies in cases of trade-secret theft by employees and others.

Not so fast, New Jersey.

Well, all that may be about to change. Details after the jump…

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If Lady Gaga tweets your trade secret, is it still a trade secret?

August 29, 2011 | by Eric B. Meyer

In a matter of minutes, or even seconds, a single tweet may reach thousands or, possibly, millions of people. Now, just imagine if that tweet contained proprietary information. (You know, like if Lady Gaga tweeted the code to Microsoft Windows 7 to her millions of followers). Ummm…work with me here…

But, even in the days before Twitter, publishing content on a blog or a message board meant putting information out in the public domain for anyone — including a competitor — to view. What if that information was supposed to be confidential? Does a trade secret lose its legal trade-secret status if it is published on the internet? Find out the answer after the jump…

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