Jenner & Block

Client Alert: Government and Private Challenges to Worker Restrictions Continue

A recently announced eight-figure settlement in a “no-poaching” class action serves as a reminder of just how costly attempting to enforce excessive and indiscriminate contractual limitations on the movement of workers can be.  As we have reported before, the trend of government activism against worker-executed restrictive covenants is clear and in all likelihood will continue.  State lawmakers across the country have introduced and enacted legislation that limits the enforceability of restrictive covenants.  These limits range from complete bans on all covenants, to limitations on the covenants’ enforceability as to certain classes of workers, to rebuttable presumptions of unenforceability.  As to executive action, state attorneys general have challenged restrictive covenants that employers have required of all workers regardless of wages, skill level or access to proprietary information.  State and federal courts have both rewritten and voided restrictive covenants challenged by workers in private litigation.  The trend of government activism against another type of restriction on worker mobility, so-called no-poach agreements, where companies agree not to hire each other’s workers, is also becoming clearer.

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