Russell Beck Featured in Law360 on Federal Noncompete Order

Russell Beck‘s article about President Biden’s recent Executive Order on noncompete agreements was published by Law360 under the title, “FTC Should Take Nuanced Approach On Noncompete Regs.

Among other things, Biden’s order encourages the FTC to exercise its rulemaking authority “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

Russell’s analysis begins with an overview of recent state and federal initiatives to restrict or eliminate the use of noncompete agreements. With respect to Biden’s recent directive to the FTC, Russell explains that “even assuming that the FTC has authority to regulate in this area, proper regulation of noncompetes is a very nuanced issue with which states have wrestled for over 200 years.”

n the article, Russell notes that there are competing viewpoints about what the FTC should do.

On one side, there are opponents of noncompete agreements who seek to ban them altogether, variously contending that “non-compete clauses inflict real harms on workers and competition and offer no credible offsetting benefits to society,” and that “employers use non-compete clauses to discourage workers from seeking, or even exploring, alternative work and business opportunities.”

On the other side, Russell notes that there are many who urge restraint and suggest “that any regulation should focus on leveling the playing field and adding additional transparency and fairness to the use of noncompetes.” This was the approach suggested by Russell Beck and scores of other experts in the field who recently submitted a letter to the FTC.

Given that it may be more than a year before the FTC issues any noncompete regulations, Russell advises that companies take the following three steps now:

  1. Reach out to the FTC to share your view.
  2. Review any restrictive covenant agreements, including those contained not just in employment agreements, but in restricted stock unit agreements, stock option agreements, long-term incentive agreements and other agreements. Also, review all policies and codes of conduct and strengthen them as appropriate.
  3. Make sure that there is a culture of confidentiality at your company. Training is critical. If you are not providing training at all stages of the employment life cycle — at the time of onboarding, during the employment relationship, and at off-boarding — you are potentially exposing your work to contamination by someone else’s information, and exfiltration and loss of your own trade secrets.

Russell was recently featured on NPR discussing President Biden’s Executive Order. In April 2020, Russell Beck and Erika Hahn’s article about the FTC’s investigation about whether it should regulate noncompetes was published by Law360. In July 2019, Law360 published Russell Beck’s analysis of misconceptions in the noncompete debate. In December 2019, Law360 also published an article by Russell Beck and Erika Hahn about federal noncompete reform efforts.

____

For up-to-the-minute analysis of legal issues concerning trade secrets and noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over thirty working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (6th ed., MCLE, Inc. 2021), used by other lawyers to help them with their noncompete matters
  • Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administering the award-winning blog, Fair Competition Law
  • Establishing and administering the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,660 and 870 members, respectively, around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2020 Chambers USA Guide, which stated that Russell Beck is “an expert in the field of trade secret and restrictive covenant law,” and is also noted for his “ability to adjust and come up with successful solutions.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Russell Beck Quoted in NPR Coverage of Biden Executive Order

NPR logoA recent episode of Weekend Edition Saturday on NPR featured Russell Beck in a story titled “What Biden’s Latest Executive Order Means For Businesses And Consumers.”

The story focused on President Biden’s recently-issued Executive Order. Among other things, the order encourages the FTC to exercise its rulemaking authorty “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

The story was reported by Andrea Hsu, NPR’s labor and workplace correspondent.

The following is a portion of Ms. Hsu’s interview with the host of Weekend Edition Saturday, Scott Simon:

Weekend Edition SaturdaySIMON: Can [President Biden] do that – a federal ban on noncompete agreements?

HSU: Well, it’s unclear. It’s certainly not going to be immediate, and it may not be a total ban. I talked with Russell Beck. He’s this attorney in Boston who tracks state laws on noncompetes. He thinks the Federal Trade Commission is likely to do something narrower, maybe something focused on low-wage workers. But he doesn’t think they’ll ban noncompetes in all workplaces.

RUSSELL BECK: I would be very surprised if the FTC went so far as to ban noncompetes for people who really do have trade secret information, other confidential information that needs to be protected.

HSU: But Beck says it’s also in question whether the FTC has the authority to enact such a ban. You know, regulation of noncompete agreements has until now been left to the states. Three states already ban them, California being the biggest, and close to a dozen states ban them for low-wage workers. So even if the FTC does move on this, it’s going to take a while. I spoke to a former acting chair of the FTC, and she said we may see a proposed rule out fairly quickly, but federal rulemaking, you know, takes forever. It has to be submitted to Congress. There are public comment periods, revisions and so on. And so it could be a year before a rule is issued. And that, Scott, would be considered fast.

Listen to the full story here.

Russell Beck was also quoted by NPR in an article appearing online discussing the same topic as follows:

[A] sweeping federal rule would be a significant departure and is expected to be challenged by businesses. At a workshop held by the FTC in January 2020, questions were raised over whether the agency even has the authority to enact a ban. Given the likelihood of legal challenges, some expect the FTC to take a narrow approach, for example banning noncompete agreements for low-wage workers rather than for everyone.

“I think a considered approach would probably be the likely approach,” says Russell Beck, a Boston attorney who has represented both employers and employees in noncompete cases.

He says he’d be very surprised if the FTC went so far as to ban noncompetes for workers who possess trade secrets or other confidential information that warrants protection.

In April 2020, Russell Beck and Erika Hahn’s article about the FTC’s investigation about whether it should regulate noncompetes was published by Law360. In July 2019, Law360 published Russell Beck’s analysis of misconceptions in the noncompete debate. In December 2019, Law360 also published an article by Russell Beck and Erika Hahn about federal noncompete reform efforts.

____

For up-to-the-minute analysis of legal issues concerning trade secrets and noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over thirty working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (6th ed., MCLE, Inc. 2021), used by other lawyers to help them with their noncompete matters
  • Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administering the award-winning blog, Fair Competition Law
  • Establishing and administering the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,660 and 870 members, respectively, around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2020 Chambers USA Guide, which stated that Russell Beck is “an expert in the field of trade secret and restrictive covenant law,” and is also noted for his “ability to adjust and come up with successful solutions.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

Russell Beck and Erika Hahn Featured in Law360 on Proposed Noncompete Ban

Russell Beck and Erika Hahn‘s article on President Biden’s proposal to ban most noncompete agreements was published by Law360 under the title, “3 Ways to Plan for a Possible Federal Ban on Noncompetes.”

Their analysis begins with an overview of current federal initiatives to restrict or eliminate the use of noncompete agreements. Russell and Erika explain that, although these initiatives “are presumably well-intended, they typically rely on nascent, nuanced, inconclusive, and sometimes inconsistent research and reflexively draw misplaced causal inferences.”

According to their article, “now is the time to review and update your overall legitimate business interest protection strategy.”

Given the uncertainty around the future of noncompete agreements, Russell and Erika provide practical steps companies should consider to protect their business interests whether or not noncompete covenants are barred. These steps include consideration of the following employee agreements:

  • Narrowly-tailored noncompete agreements
  • Nondisclosure agreements
  • Nonsolicitation, noninterference and no-service agreements
  • No-recruit, no-raid and no-hire agreements
  • Invention assignment agreements
  • Springing (or “time out”) noncompetes

In their article, Russell and Erika observe that “even if noncompetes are banned, similar restrictions may survive (to the extent permitted by state law),” including the following:

  • Traditional garden leave/notice covenants: Through these agreements, employee are required to provide notice of resignation for a specified (typically, lengthy) period, during which they remain employed by their soon-to-be-former employer (but do no work) and, as a consequence, remain bound by their fiduciary duties (including to not compete).
  • Forfeiture-for-competition agreements and compensation-for-competition agreements: These are agreements by which an employee either forfeits certain benefits or pays some amount of money (often a percentage of revenues) if they engage in activities that are competitive with their former employer.
  • Compensation-for-noncompetition-choice agreements: These agreements provide for a payment (money, stock options, profit sharing or other consideration) to an employee who voluntarily chooses to refrain from competing. Unlike a forfeiture-for-competition provision (which is often considered a noncompete), nothing is forfeited. Instead, if they choose to refrain from competing, they receive compensation to which they otherwise would not have been entitled.

In April 2020, Russell Beck and Erika Hahn’s article about the FTC’s investigation about whether it should regulate noncompetes was published by Law360. In July 2019, Law360 published Russell Beck’s analysis of misconceptions in the noncompete debate. In December 2019, Law360 also published an article by Russell Beck and Erika Hahn about federal noncompete reform efforts.

____

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty five years working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Authoring the book Trade Secrets Law for the Massachusetts Practitioner (1st ed. MCLE 2019), covering trade secrets nationally, with a focus on Massachusetts law
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 and 850 members, respectively, around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2020 Chambers USA Guide, which stated that Russell Beck is “an expert in the field of trade secret and restrictive covenant law,” and is also noted for his “ability to adjust and come up with successful solutions.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment.

We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

Russell Beck and Erika Hahn Featured in Law360 on FTC Regulation of Noncompete Agreements

Russell Beck and Erika Hahn‘s response to the Federal Trade Commission’s investigation whether it should regulate noncompete agreements was published by Law360 under the title, “FTC Should Leave Regulation of Noncompetes to States.”

Russell’s response to the FTC’s inquiry can also be found at Fair Competition Law as “FTC Noncompete Workshop – Update on Our Submission.”

The analysis reflects the testimony submitted by 22 lawyers from around the country (including Russell Beck) to the FTC.  In sum, the testimony asserts that

noncompetes have been regulated by the states for over 200 years, and all 50 states have made policy decisions that make sense for their citizens and their economies. In more than 30 of those states, legislatures have recently been reevaluating their law, with different outcomes that balance competing interests in a way that reflects the economic realities of the particular state.

Nevertheless, in no state does the law permit unfettered use of noncompetes, nor has any state banned noncompetes wholesale since 1890. Rather, each of the 47 states permitting noncompetes allows them to be used, to a greater or lesser extent, only as necessary to protect companies from certain types of unfair competition.

Russell and Erika’s article further contends that the FTC should refrain from regulating noncompete agreements, as follows:

The FTC should not use its rulemaking authority to address noncompete clauses. Rather, the states should be left to evaluate and regulate their own economies as they see fit — as they have done for over 200 years. There is no gap to fill. All 50 states have made policy choices — and more than 30 of them have recently or are currently reevaluating those choices, choosing outcomes that make sense for their unique circumstances.

To the extent that the FTC has authority to promulgate a rule and chooses to exercise it, the FTC should be judicious. Before considering any regulatory action, it is important to understand the potential unintended consequences of significant changes in the law, including, for example, significantly increasing the likelihood that trade secrets will be unlawfully taken to a competitor and increasing the volume of more costly trade secret litigation.

The article concludes that,

While the laws are certainly in a state of flux and should remain the purview of the states, any changes should be made only with a proper factual basis — not on misplaced assumptions.

In July 2019, Law360 published Russell Beck’s analysis of misconceptions in the noncompete debate. In December 2019, Law360 also published an article by Russell Beck and Erika Hahn about federal noncompete reform efforts.

____

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty four years of working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

Russell Beck and Erika Hahn Featured in Law360 on Federal Noncompete Reform

Russell Beck and Erika Hahn‘s analysis of the misconceptions underlying various efforts to reform, and even ban, noncompete agreements was published by Law360 under the title, “Noncompete Misconceptions May Be Inhibiting Reform.”

The full analysis is also available (without subscription) at Fair Competition Law as “Federal Noncompete Initiatives: When you can’t convince the states, ask the feds.

The analysis discusses recent efforts at the federal level to restrict or ban noncompetes, which follows on the heels of several years of legislative efforts across myriad states to modify noncompete laws. Although very few states have enacted laws that ban noncompete agreements outright, recently-filed federal legislation seeks to just that.

According to Russell and Erika’s analysis, much of the push for restrictions or a ban is premised on:

  • The mistaken assumption that Silicon Valley is the epicenter of tech because California bans noncompetes;
  • Recent preliminary, inconclusive and somewhat inconsistent studies, the nuances of which are ignored;
  • The mistaken belief that trade secret laws and nondisclosure agreements provide adequate protections for trade secrets;
  • The mistaken belief that noncompetes prevent employees from using their general skill and knowledge; and
  • The prevalence of abuses in the use and drafting of noncompetes.

As discussed in the article, Russell Beck submitted testimony to the United States Senate Committee on Small Business and Entrepreneurship hearing on “Noncompete Agreements and American Workers.”

In his testimony and in the article, Russell made the five following recommendations:

  1. Ban noncompetes for low-wage workers.

As a group, low-wage workers rarely have the level of exposure to trade secrets or depth and breadth of customer relationships that might warrant the enforcement of a noncompete, given the countervailing issues.

  1. Ban noncompetes for medical professionals.

The use of noncompetes for doctors, nurses and other health care providers has received substantial scrutiny in the past few years, with many states changing their noncompete laws to ban such agreements. Given the overwhelming public interest in patients having the ability to select who provides their medical care, exempting medical professionals is certainly a rational policy.

  1. Require employers to provide advance notice if they wish employees to sign a noncompete.

One of the other major criticisms of noncompetes is that they are often sprung on employees the day they show up to work. A simple way to eliminate that problem, while retaining the potential benefits of negotiated noncompetes . . ., is to require advance notice.

  1. Adopt the so-called purple pencil approach for overly broad noncompetes.

That approach is a hybrid of the reformation approach (where courts rewrite overly broad agreements) and the red pencil approach (where courts void an overly broad noncompete in its entirety). Specifically, it requires courts to void an overly broad noncompete unless the language reflects a good faith intent to draft a narrow restriction, in which case the court may reform it

  1. Expressly authorize springing noncompetes.

To the extent that one of the goals is to encourage companies to limit their use of noncompetes generally, employers must have a viable remedy for when employees violate other, less-restrictive, obligations such as nondisclosure agreements and nonsolicitation agreements, misappropriate trade secrets, or breach their fiduciary duties to the company. In Massachusetts, the new noncompete law expressly authorizes courts to do this, essentially by imposing a noncompete.

These recommendations were among those suggested by the Obama administration in its 2016 call to action on noncompetes and adopted by many of the states making changes to their laws in the past few years.

In July 2019, Law360 published Russell Beck’s analysis of misconceptions in the noncompete debate.

____

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty four years of working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

Law360 Publishes Russell Beck’s Analysis of Misconceptions in the Noncompete Debate

Russell Beck‘s analysis of the misconceptions concerning the impacts of noncompete agreements was published by Law360 under the title, “Misconceptions In The Debate About Noncompetes.”

According to Law360, Russell Beck’s article is one of the “10 Most-Read” employment Law360 articles of 2019.

The analysis focuses on how the mistaken assumption that correlation implies causation has been increasingly informing decisions in the ongoing debate about the effects of noncompetes on the economy.

In particular, the analysis addresses two primary errors: (1) assuming that California’s ban on employee noncompetes is the reason for Silicon Valley’s success; (2) interpreting the developing research on the impacts of noncompetes as establishing that noncompetes are bad for the economy; and (3) failing to understand the unintended consequences of a ban on noncompetes, including, in particular, the elimination of an important tool for the protection of trade secrets.

The analysis ends with a caution to lawmakers considering changes to noncompete laws:

The proper regulation of employee noncompetes is an extremely complicated issue with no silver bullet. If policymakers believe that the prevailing market forces are insufficient to adequately limit the abusive use of noncompetes, legislative action is certainly an appropriate response. But, absent making the affirmative decision to base legislative policy on a visceral antipathy toward noncompetes, policymakers should engage in a critical analysis and avoid the temptation to rush to judgment. In particular, they need to be aware of – and at least consider, if not carefully weigh – the unintended adverse consequences of a policy that would ban noncompetes wholesale. The research into those considerations is, however, even more nascent than the research into the theorized adverse impacts of noncompetes.

In light of this, lawmakers should tread cautiously down any path that leads to the elimination of noncompete agreements. Indeed, the Obama Administration in its Call to Action and every state changing its noncompete laws has so far recognized this as well – and all have taken a tempered, considered approach.

The full analysis is also available (without subscription) at on Fair Competition Law as “Correlation Does Not Imply Causation: The False Comparison of Silicon Valley and Boston’s Route 128.”

____

For up-to-the-minute analysis of legal issues concerning noncompete agreements in Massachusetts and across the United States, read Russell Beck’s blog, Fair Competition Law.

eck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

The Wall Street Journal featured Beck Reed Riden LLP’s noncompete agreement experience. In 2016, the White House issued a report entitled, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses,” relying in part on Beck Reed Riden LLP’s research and analysis, including its 50 State Noncompete Survey.

Russell Beck’s work in this area is well recognized, and includes:

  • Over twenty four years of working on trade secret, noncompete, and unfair competition matters
  • Assisting the Obama White House as part of a small working group to develop President Obama’s Noncompete Call to Action
  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete matters
  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law
  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
  • Founding and administrating the award-winning blog, Fair Competition Law
  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 1,600 members around the world
  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the 2019 Chambers USA Guide, which stated that Russell Beck is a “terrific” attorney, who “is an excellent choice of counsel regarding noncompete agreements and the resolution of restrictive covenant disputes.” Chambers noted that Russell “basically wrote the new Massachusetts statute on noncompetes” and that “he’s an expert in employee mobility and nonrestrictive covenants.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

 

Massachusetts Court Warns Employers Not to Coast on Forum Selection Clause

he Business Litigation Session of the Massachusetts Superior Court recently dismissed a noncompete case against a California employee on the basis of forum non conveniens, notwithstanding a Massachusetts forum selection clause and a Massachusetts choice-of-law provision in the defendant’s employment agreement. The case is titled Oxford Global Resources, LLC v. Hernandezand it was issued on June 9, 2017.

This decision calls into question the enforceability of forum selection and choice-of-law provisions in employment agreements with California employees. The decision also characterizes employment agreements (especially with low-level employees) as “contracts of adhesion” that may be subject to more careful judicial scrutiny. Finally, as discussed below, the Hernandez opinion takes a dim view of what constitutes an employer’s “confidential information,” highlighting existing tension in Massachusetts case law.

Background

efendant Jeremy Hernandez was a California resident who was recruited, hired, and employed by Plaintiff Oxford Global Resources, LLC, in California. Hernandez’s employment with Oxford was conditioned on his signing a “protective covenants agreement,” which contained confidentiality, noncompete, and nonsolicitation obligations, as well as a Massachusetts choice-of-law provision and a Massachusetts forum selection clause. Oxford filed the case claiming that Hernandez breached his agreement when he used Oxford’s confidential information to solicit its clients on behalf of a competitor. Hernandez moved to dismiss the case on the basis of forum non conveniens.

As an initial matter, the Court found that because Hernandez had no meaningful opportunity to negotiate the terms of his employment agreement, it was a contract of adhesion that was subject to careful scrutiny. The Court based its finding on the following facts:

  1. Oxford would not have hired Hernandez if he did not sign the agreement.
  2. Oxford did not allege or offer any evidence suggesting that the parties negotiated the choice-of-law or forum selection provisions, or that Oxford had even demonstrated a willingness to discuss the issues.
  3. Hernandez started as an entry-level employee at $50,000 annual salary.
  4. Hernandez possessed no prior industry skill or experience that would have given him bargaining power to negotiate the agreement.

Notably, the Court did not give any weight to “boilerplate language” in the agreement stating that Hernandez had read the agreement and had the opportunity to have his own lawyer review it.

The Court next found that enforcing the agreement’s Massachusetts choice-of-law provision would result in “substantial injustice” to Hernandez. Because Hernandez was a California resident who was recruited, hired, and employed there, California law (generally voiding noncompetes) would otherwise govern the dispute absent a choice-of-law provision. The court ruled that enforcing the provision would deny Hernandez the protections of California law and subject him to a noncompete.

Although some California courts recognize a trade secret exception that permits the enforcement of agreements that are “necessary to protect the employer’s trade secrets,” the Court nevertheless found that the agreement, which provided that Hernandez could not compete against Oxford using its trade secret information, was not enforceable because it defined confidential information so broadly as to include the identities of Oxford’s customers, prospective customers, and consultants. The Court stated:

The non-competition restriction that Oxford seeks to enforce therefore goes far beyond what is permitted under California law or, for that matter, under Massachusetts law.

An employee is free to carry away his own memory of customers’ names, needs, and habits and use that information, even to serve or to solicit business from those very customers. Such “remembered information” is not confidential because the information itself, as distinguished from an employer’s compilation of such information into a list or database, is known to the customers and thus not kept secret by the employer

The Court concluded that:

Since the mere identity of customers is not confidential, the Agreement that Oxford seeks to enforce is the kind of non-competition agreement that is void under California law. Accordingly, the Court held that the choice-of-law provision was not enforceable.

Finding that it was evident that Oxford sought to include a Massachusetts forum selection clause in order to avoid the application of California law, the Court also held that the forum selection clause was not enforceable under California law.

Ultimately, the Court dismissed the case on grounds of forum non conveniens, finding that it would be unfair to compel Hernandez to defend in Massachusetts and that California had a stronger interest in the case.

Import of the Hernandez Decision

ernandez not only underscores the difficulty of enforcing restrictive covenants against California residents, but also generally calls into question the validity of choice-of-law and forum selection clauses, especially where the employee has had no meaningful opportunity to negotiate the terms of his employment agreement.

Notably, in characterizing the employment agreement as a “contract of adhesion,” the Court in Hernandez gave no weight to the affirmative representations in the agreement (stating that the employee had read and had opportunity to have his attorney review the agreement). Historically, the Superior Court has given varying degrees of weight to these types of affirmative representations.

Moreover, Hernandez adds to the argument that (in some instances) employees are permitted to use their employer’s confidential information concerning client names, needs, and habits, as long as that information is “remembered” rather than compiled into a list or database. In this respect, Hernandez highlights the tension that exists in Massachusetts case law regarding confidential information that is stored in an employee’s memory.

Given the evolving case law on these issues, businesses seeking to protect their confidential information should consult with their attorneys before drafting or enforcing these types of agreements.

***

Hannah T. Joseph, the author of this article, is a lawyer in the firm’s litigation practice, whose work in intellectual property has been recognized by, among others, the Boston Bar Association (where she serves as Co-Chair of the Boston Bar Association’s Intellectual Property Committee). Thank you to Monika Zarski for contributing to this article.

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and labor and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Russell Beck’s Presentations on the Defend Trade Secrets Act

Russell BeckRussell Beck is giving a series of presentations across the country about the Defend Trade Secrets Act.

In May 2016, President Obama signed the Defend Trade Secrets Act of 2016 (“DTSA”)—a law that is arguably the most significant development in trade secrets law in over 30 years—putting trade secrets on par with other intellectual property.

On May 24, Russell spoke on a panel at the Boston Bar Association titled “The Defend Trade Secrets Act of 2016: A Federal Private Action for Global Unfair Competition.” The presentation focused on the anticipated utility of the new federal law:

Last month, responding to estimated annual losses to foreign thieves of $300 billion of trade secrets and 2.1 million jobs, Congress voted nearly unanimously (Senate 87-0, House 410-2) to enact the Defend Trade Secrets Act of 2016 (“DTSA”).

Will the new ex parte seizure provision adapted from anti-counterfeiting law help stem these losses?  Or does the existing Economic Espionage Act of 1996 framework into which DTSA was inserted expose American companies to claims of misappropriation in foreign territory?

On May 26, Russell appeared with a panel on a webinar hosted by the American Intellectual Property Law Association titled “Are you ready for the Defend Trade Secrets Act?” The presentation focused on what practitioners need to know and do regarding the DTSA. The panelists discussed the law’s addition of federal jurisdiction as an option for litigants, the statute creates opportunities and uncertainties around how and where to file litigation, as well as how to deal with combined state and federal claims.

White HouseOn May 26, Russell also gave a presentation with a panel at the Massachusetts Bar Association titled “What’s Mine is Mine — Trade Secrets: The new federal private right of action for misappropriation of trade secrets.”

On May 27, Russell and Stephen Chow, of Burns & Levinson, LLP, gave a seminar at Massachusetts Continuing Legal Education titled “‘1st Look at the Defend Trade Secrets Act.” The MCLE seminar focused on the impact of the DTSA on companies’ ability to protect their trade secrets, the potential ramifications of missteps along the way, and the risks to U.S. companies and others. A recording of this webcast is available online from MCLE.

In addition, on May 19, Russell moderated a panel discussion at the American Intellectual Property Law Association‘s 2016 Spring Meeting Session in Minneapolis, MN. The AIPLA presentation was titled “Corporate Practice/ Trade Secret Law” and it focused on topics including the ethics of monitoring employees for security breaches and the use of restrictive covenants for in-house counsel.

On June 13, 2016, Russell will be a panelist at the 8th Annual Symposium on Non-Compete Agreements and Trade Secrets in Boston. The Boston Bar Association is sponsoring the Symposium, which will be held on Monday, June 13, 2016, from 4 to 6:30 p.m. at 16 Beacon Street in Boston. Registration information is here.

BLF 2014_Silver_GeneralBeck Reed Riden LLPis among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

Russell Beck’s work in this area is well recognized; it includes:

  • Over sixteen years of working on trade secret, noncompete, and unfair competition matters

  • Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (5th ed., MCLE, Inc. 2015), used by other lawyers to help them with their noncompete cases

  • Drafting and advising on legislation for the Massachusetts Legislature to define, codify, and improve noncompetition law

  • Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law

  • Founding and administrating the award-winning blog, Fair Competition Law

  • Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 750 members around the world

  • Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell has been repeatedly honored for his work in this area of law in the Chambers USA Guide, which explained that “Russell Beck of Beck Reed Riden LLP specializes in noncompete litigation and is a trade secrets expert. He comes highly recommended by his peers for his nationwide practice in this niche. ‘He’s fantastic,’ sources say.”

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and labor and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.