July 24, 2017
Authored by: Jay Warren, Jay Zweig, Anthony George, Chris Galanek, Brian Sher and Mark Deiermann
In mid-May, the New York Times published a long article reporting a national trend that employers are expanding both the number of employees who are required to sign non-competition agreements and the types of employees required to sign these agreements. The article emphasized stories of low-paid, low-level employees who could not find a new job, or had to take a lower paying job, because they signed a non-competition agreement. The Times ran an editorial that urged legislatures to prohibit employers from restricting the employment opportunities of lower paid employees.
What is missing from this picture?
While the Times article mentioned states vary in enforcement of non-competition restrictions, noting that California prohibits all restrictions on employees moving to new jobs, it did not explain the important differences in how states other than California enforce non-competition restrictions. The Times article also did not report the damage to a business that may result from an employee’s taking advantage of trade secrets learned while working for the former employer, or of customer relationships that were entrusted, to compete unfairly with the former employer.
We asked a few of our non-competition attorneys for their perspectives on some of the questions raised by the Times article: Why do companies require lower-level employees to sign non-competition agreements? How typical is it for companies to seek to enforce those agreements for lower-level employees? How do courts in each state respond to those enforcement efforts?
Under Arizona law, restrictive covenants are disfavored and are construed narrowly by