Hunton Employment & Labor Perspectives

The Federal Trade Commission (FTC) voted on April 23 to approve a final rule banning most non-compete agreements between employers and their workers (Final Rule). The Final Rule is scheduled to go into effect 120 days after it is published in the Federal Register, which will likely occur in the next few weeks, though legal challenges may delay the Final Rule’s effective date and FTC enforcement actions.

In recent years, there has been a growing trend amongst litigants of protecting documents filed as part of the judicial record from public view by sealing them by agreement under a protective order.  However, a recent opinion out of the U.S. Court of Appeals for the Fifth Circuit criticizes this now-common practice.  Binh Hoa Le v. Exeter Fin. Corp., No. 20-10377, ––– F.3d –––, 2021 WL 838266 (5th Cir. March 5, 2021).

Last month, Washington, D.C. Mayor Muriel Bowser signed the Ban On Non-Compete Agreements Amendment Act of 2020 (“the Act”), which becomes effective next week.  This law is a statutory ban on non-compete agreements that has the strength of similar bans in California, North Dakota, and Oklahoma.

The Act applies to all D.C. private employers and applies broadly to most employees who perform work in D.C. or whom a prospective employer reasonably anticipates will perform work in D.C.  The law does not have a minimum salary threshold.  Under the Act, employers are prohibited from ...

Historically, bank executives have faced civil liability for breach of contract and violations of state laws governing the misappropriation of trade secrets for misusing their employer’s confidential and proprietary information. However, a recent “notice of intent to prohibit” issued by the Federal Reserve indicates that bank executives may now face a much harsher consequence than mere civil liability for misappropriating their employers’ information — namely, a ban from the business of banking altogether.

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The recently enacted Defend Trade Secrets Act of 2016 (DTSA) provides a new form of expedited relief in federal court for owners of misappropriated trade secrets through an ex parte seizure of property. In “extraordinary circumstances,” DTSA permits a court to issue an order to authorize law enforcement officials to seize property – without advanced notice to the accused – in order to prevent the propagation or dissemination of the trade secret. The utilization of this ex parte seizure does not come without risk. Section 2(b)(2)(G) provides that in the case of wrongful or excessive seizure, a person who suffers damages has a cause of action against the applicant and can seek reasonable attorneys’ fees, damages for lost profits, cost of materials, loss of good will and punitive damages.

As we previously reported, the newly-enacted Defend Trade Secrets Act (DTSA) represents a significant new weapon for companies to prosecute trade secret violations. Among other features, the DTSA’s nationwide reach and its provision for judicial seizure, double damages, and attorneys’ fees provide a much more robust enforcement and remedy scheme than is currently available under many state laws.

Congress gave companies a new weapon to fight trade secret theft this week. President Obama signed a law that addresses several issues that often mire trade secret litigation – cross border battles when multiple states are involved, venue and choice of law disputes, and lack of ability to seize trade secrets before they escape a state or the United States. Companies now have a civil federal cause of action (original federal jurisdiction) for trade secret theft and the ability to seize trade secrets through an ex parte temporary injunction procedure that could prove to be incredibly costly for the unfortunate company whose newly hired employee stole trade secrets from a former employer. There will be more to come on these elements over the next few weeks.

In Holton v. Physician Oncology Services, LP, et al., Case No. S13A0012 (May 6, 2013), the Georgia Supreme Court limited the use and application of the inevitable disclosure doctrine by declining to recognize it as an independent cause of action. 

The inevitable disclosure doctrine allows an employer to restrict former employees from working for a competitor by demonstrating that the former employees will necessarily rely upon knowledge of the employer’s trade secrets in performing their new job duties.