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Non-Competes: More Popular Than Seeing Coldplay For An Affair
Every now and then, labor and employment law gets its moment in the sun. Most of the time, that moment involves a major law being passed or a genuinely newsworthy judicial decision. And then, sometimes, it involves a fan-cam at a Coldplay concert uncovering an alleged affair between a CEO and the head of HR. Too Much has already been written about that particular debacle, so we’re going to pivot to the far more fascinating topic of nationwide injunctions and non-competes in this edition. But first, since we know what you’re really thinking, here are some answers to the main questions we’ve heard since the jumbotron incident:
- That looked pretty consensual, can she still sue the company? For those of you thinking “what, that’s crazy!” – you must be new here, welcome to the world of employment law.
- Is this why you recommend policies on intra-office dating, especially for leadership? Ding ding ding.
- Who leads the anti-harassment training next quarter? Someone very, very new.
And with that, onto our main story!
Why Nationwide Injunctions Still Matter (even if they no longer matter)
For years, federal agencies would roll out sweeping rules only to have a single district court judge (usually from Texas or California) hit the pause button with a nationwide injunction. A recent example of this is when the Department of Labor tried rolling out a new rule that would dramatically increase the salary thresholds for the overtime exemption . . . until a federal judge issued a nationwide order and the entire thing was stalled. And even though in today’s news-cycle it feels longer, we’re roughly at the one-year anniversary of when a federal judge in Dallas issued a nationwide injunction preventing the FTC from enforcing its rule banning non-compete agreements.
Well, as you may have heard, a few weeks ago the Supreme Court issued its decision in Trump v. CASA, Inc. In CASA, the Court held that lower courts generally lack the authority to issue injunctions that apply to everyone in the country. Instead, injunctions should typically be limited to providing “complete relief” only to the specific parties who brought the case. This means that going forward, if a federal rule (like, I don’t know, let’s say the DOL’s 87th attempt to increase the salary thresholds for exempt status) is challenged in court, any resulting injunction will likely apply only to the plaintiffs who sued, not to every employer nationwide.
. . . this also means that, should the political winds shift in 2028 and a certain party reclaims the White House, it is likely that another attempt will be made to push a federal non-compete ban. And post-CASA, any subsequent challenge to block enforcement may only impact the actual litigants and not trigger national relief/dread.
The Wave of State-Level Health Care Non-Compete Bans
While we wait to see how this non-compete saga shakes out on the federal level, states have gone full speed ahead enacting their own laws banning non-competes, with a specific theme occurring in the health care sector. In June, Colorado passed a law restricting the use of non-competes and certain non-solicits for health care providers, regardless of their compensation. Perhaps it’s in response to staffing shortages and the public’s interest in better access to care, or just more effective lobbying. Either way, Colorado now joins a growing list of states with laws targeting restrictive covenants for physicians and other healthcare providers. These states include Illinois, Indiana, Montana, Oregon, Texas, Utah, and Pennsylvania. Not to mention the states that already had laws on their books banning all non-competes (yes, California, we know . . . you’re on that list).
What Employers Should Do Now
“Cool fearmongering . . . what should we do??” Thank you for the compliment, and great question. Understanding that the only constant here is change, it’s likely a safe bet that employers will face new rules in the future. And if you’re even thinking about remote workers, or expanding beyond your current state lines, you’re already in this constantly evolving maze, so prepare now. Audit your agreements and reassess your restrictive covenants. In most scenarios we see, a non-compete is not what the employer actually wants, so consider leaning into alternatives like confidentiality, non-solicitation, and garden leave provisions. At the very least, make sure you have a solid handle on where you’re operating and whether there are any current – or pending – rules that will force your hand. The legal landscape is shifting quickly in this space, so best to be proactive.
Have a great weekend, all! And as always, if you’ve got questions, you know we’ve got answers.
~ The W + K Team
ABOUT WEINSTEIN + KLEIN P.C.
Founded in 2019, Weinstein + Klein is a modern boutique law firm that serves as outside general counsel to businesses across industries. Weinstein + Klein provides strategic, day-to-day legal support with a focus on labor and employment law, corporate and transactional matters, and business litigation. Weinstein + Klein works closely with business owners, executives, and entrepreneurs to proactively manage risk, navigate complex employment issues, and handle key transactions – from formation to funding to exit.