Non-compete agreements are a hot-button legal issue

| Jun 23, 2020 | Blog, Business Law

Workers in Pennsylvania and around the country who have access to trade secrets or other sensitive information often have non-compete clauses in their employment contracts or are asked to sign separate non-compete agreements. These clauses or agreements are designed to protect employers by preventing key workers from taking positions at competing businesses and sharing proprietary information, and they have become a hot-button legal issue in recent years.

Employers have been requiring key workers to sign non-compete agreements for decades, but the practice has become far more common in the last two decades. The popularity of these agreements in the technology sector prompted lawmakers in Washington, which is home to both Amazon and Microsoft, to impose a series of non-compete restrictions, and judges in California have refused to enforce restrictive employment contracts even when they were signed in a different state.

A current case dealing with this issue involves the technology giants Amazon and Google. A senior Amazon executive accepted a position at Google after being passed over for a promotion, which prompted the Seattle-based online retailer to file a lawsuit and seek a temporary restraining order. The litigation was initiated because the executive signed a confidentiality and noncompetition agreement with Amazon that prohibits him from working for a competitor for 18 months. A preliminary injunction meeting between the parties has been scheduled for July 31. Amazon took legal action to protect its 48% share of the cloud infrastructure market. Google currently only has 4% of this lucrative and growing market.

Attorneys with experience in this area may seek to avoid this kind of business litigation by scrutinizing employment contracts closely before they are signed and ensuring that both of the parties involved understand their rights and responsibilities. When disputes do occur and traditional negotiations are unsuccessful, attorneys may suggest alternative approaches like arbitration or mediation to avoid costly lawsuits.

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