The New York State Legislature recently passed a bill that will prohibit employers from entering covenants not to compete with their employees and contractors. The bill specifically exempts nondisclosure and client nonsolicitation agreements, but it is silent on employee nonsolicitation agreements and sale of business restrictions.
Effective July 1, 2023, Minnesota will no longer allow covenants not to compete, with limited exceptions for the sale or dissolution of a business. The law is not retroactive, nor does it apply to nondisclosure agreements or client/customer nonsolicitation restrictions.
Illinois has enacted a new law governing restrictive covenants: Public Act 102-0358. This law outlines the requirements for valid noncompetition and nonsolicitation agreements, and enforcement of those covenants. It will apply to all agreements entered into on or after January 1, 2022.
According to McDermott’s Brian Mead and Barrick Bollman, the legislation allows an employee to recover costs and reasonable attorney’s fees if the employee prevails in an action seeking to enforce a noncompetition or nonsolicitation agreement. The legislation also requires that employers advise employees, in writing, to consult with counsel before entering into a noncompetition or nonsolicitation agreement, and that employees be afforded 14 days to review the covenant before signing.
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