On February 16, the Federal Trade Commission (FTC) hosted a public forum to examine its proposed rule to ban non-compete agreements. Non-compete clauses serve to protect a business’s trade secrets and confidential information, which makes such a ban a concern for many businesses. The comment period for this proposed rule ends on March 20, so businesses should consider voicing their concerns during this time. This article summarizes the remarks made during the public forum by the FTC, a panel discussion, and comments from the public.
FTC To Host Virtual Public Forum
As we recently reported, in January 2023, the Federal Trade Commission (FTC) announced a proposed nationwide ban on non-compete clauses. The proposed rule would restrict employers from enforcing all existing and future non-compete agreements with their employees.
The FTC announced that it will host a free and open public forum on Thursday, February 16, 2023, from 12 p.m. to 3 p.m. EST. This forum will examine the proposed rule and provide workers and business owners with an opportunity to ask questions, express concerns, and share their past experiences with non-competes.
Attendees may register to speak at the forum on the FTC’s website. Registration to speak is on a first come, first served basis. Details about the forum and registration may be found here.
Comment Period for FTC’s Proposed Ban on Non-Compete Agreements Ends March 20 — The Time to Act Is Now!
On January 5, 2023, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking essentially banning non-compete clauses and categorizing them as unfair methods of competition. Non-compete clauses serve to protect a business’s trade secrets and other confidential information, which makes the adoption of such a rule a major concern for all US businesses. Our previous article addressed the legal challenges the FTC will likely face in light of the proposed ban on non-compete agreements. The comment period for this proposed rule ends on March 20, and businesses should consider voicing their concerns before the deadline. This article summarizes some of the major ways that the rule could affect businesses, as well as what issues could be raised during the comment period.
Legal Challenges the FTC Faces in Light of Proposed Ban on Non-Compete Agreements
On January 5, 2023, the Federal Trade Commission (FTC) issued a Notice of Proposed Rulemaking essentially banning non-compete clauses and categorizing them as unfair methods of competition. Non-compete clauses serve to protect a business’s trade secrets and other confidential information, which makes the adoption of such a rule concerning for all US businesses. Our previous article addressed how the FTC’s proposed ban on non-compete agreements could affect your business. This article summarizes some of the legal challenges the proposed rule will likely face.
How the FTC’s Proposed Ban on Non-Compete Agreements Could Affect Your Business
On January 5, 2023 the Federal Trade Commission released a Notice of Proposed Rule that would essentially ban all non-compete agreements between employers and employees. If the proposed rule or a similar rule is adopted by the FTC, it would have a profound impact on all US businesses and particularly those businesses that utilize non-compete agreements to protect their trade secrets and confidential business information. This article provides a summary of the proposed rule and actions you can take to have your opinion heard regarding the likely impacts of the proposed rule on your business.
Jones Walker LLP Releases Results of Third Cybersecurity Survey
Jones Walker LLP recently released the findings of our 2022 Ports and Terminals Cybersecurity Survey. Since 2018, we have surveyed key US infrastructure industries including the greater maritime industry in 2018 and the midstream oil and gas industry in 2020. The economic effects of the COVID-19 pandemic, geopolitical events, supply chain disruptions, labor shortages, rising inflation, and unstable energy prices make cybersecurity a growing concern for owners and operators of US ports and maritime terminals.
Proper Cybersecurity Training is Key to Cybersecurity Resilience
Andrew R. Lee, a partner in the Litigation Practice Group and co-chair of the firm’s privacy & data security team, and James Kearns, special counsel in the Maritime Practice Group, authored the article “OP-ED: Cybersecurity training is key to cybersecurity resiliency” published by Marine Log on July 19.
Andy and Jim remind industry stakeholders to devote sufficient time and other resources to refreshing the cybersecurity training of their employees, at least annually and preferably more often, in order to detect and thwart cyber-attacks.
24 Hours: Government Likely to Require Notice of Ransomware Payments from Banks, Other Key Businesses
Most banks and their service providers are familiar with the final rule governing notice for “notification incidents” and “cyber security incidents.” With compliance due by May 1, 2022, the rule establishes standards and deadlines for service providers to notify banks of such incidents and for banks to notify their primary federal regulator “as soon as possible and no later than 36 hours” after the bank “determines” that a notification incident has occurred. (For more, see this summary.) However, a recently enacted law requiring new rulemaking by the Cybersecurity and Infrastructure Security Agency (or CISA for short) within the Department of Homeland Security could upend a key compromise made during the finalization of the banking rules.
Lavigne & Hubert Author Article in IPWatchdog
Joe Lavigne and Tom Hubert, partners in the Labor & Employment Practice Group in the New Orleans office, authored “(Not-So) Amicable Separations: Preventing, Investigating, and Responding to Trade Secret Misappropriation by Departing Employees” published by IPWatchdog. Joe and Tom shared helpful tips to protect company trade secrets and confidential information from theft, liability, and employee mishandling of trade secrets or proprietary information during each stage in the hiring, employment, and separation process.
A Broken Marriage: Bridal Designer Cannot Compete but Regains Control of Social Media Accounts
In the case JLM Couture Inc. v. Gutman, in the U.S. Court of Appeals for the Second Circuit, a bridal designer signed an employment agreement that barred her from competing with her employer – JLM Couture Inc. (JLM) – following her employment. The designer also agreed to give certain rights to JLM related to a bridal line created in the designer’s own name in exchange for compensation and JLM’s investment in the brand. The agreement also prevented the designer from using variations of her name to market bridal wear.
Things went south, however, when JLM tried to renegotiate the parties’ deal by expanding the designer’s social media job duties. When negotiations fell apart, the designer locked JLM out of social media pages, and she started one or more new social media accounts under a slightly different trade name. JLM then sued for breach of contract, unfair competition, and conversion of social media accounts, among other things.
A federal district court judge enforced the non-compete even though it went so far as to prevent the bridal designer from using variations of her own name to earn a living. But the trial court went too far, according to the appellate court, when it ordered the bridal designer to transfer sole control of business-related social media accounts to JLM, ownership over which the parties fiercely disputed. Though the bridal designer’s right to compete was limited by her JLM employment agreement, she “never forfeited her right to keep property that is legally hers,” according to U.S. Circuit Judge Michael H. Park. Notably, a dissenting appellate judge found that the injunction against the bridal designer went too far because not only did it prohibit her from using her name for marketing bridal wear, i.e. the business in which she was engaged by JLM, but it also restricted her from using her name to market any product.
This case reminds employers that non-competes should be tightly drafted because they often must withstand a high degree of scrutiny. This case is also a cautionary tale against resting exclusive access to social media accounts in the hands of one employee.