Toolkit · Labor and Employment

The Restrictive Covenants and Employee Mobility Toolkit

15 U.S.C. § 45

Type
Toolkit
Jurisdiction
National
Date
2025-06-04
Topic
Labor and Employment

A research and resource map for restrictive covenant practice, built for employment counsel, litigators, in-house lawyers, and anyone advising on a departure or a competitive hire. Ten pillars organize the field: the protectable interest requirement and the reasonableness framework, consideration and formation and assignment, the state statutory wave of bans and income thresholds and notice and garden leave requirements, the FTC non-compete rule and what remains of federal competition authority after it was set aside and abandoned, the blue pencil and reformation and red pencil approaches and their drafting consequences, choice of law and forum and the anti-enforcement statutes that void both, customer and employee non-solicitation and the antitrust exposure of agreements between employers, confidentiality and invention assignment with their statutory notice traps, trade secret protection under the DTSA and UTSA including inevitable disclosure and the whistleblower immunity notice, and emergency relief and forensics and the protocol for hiring from a competitor. Each pillar states the doctrine, names the controlling authorities, flags the trap and its second-order consequence, and points deeper. An authority shelf collects statutes, regulations, leading cases, and secondary sources. Two appendices supply a covenant-design decision matrix and a jurisdictional triage table.

The Restrictive Covenants and Employee Mobility Toolkit

Labor and Employment > Restrictive Covenants | Published 4 June 2025 - Updated 14 July 2026 | UpLaw - uplaw.us

In brief. Find out where the employee actually worked before you read the governing-law clause — it may be void there. Then ask the four questions that decide cases: is there a protectable interest, is the restraint tailored to it, was the statutory paperwork done, and what does this state do with an overbroad covenant? The third question kills more covenants than the first two combined.

Keywords: protectable interest, thresholds, advance notice, garden leave, Ryan LLC v. FTC, red pencil, reformation, § 925, § 16600.5, BDO Seidman, no-poach, DTSA, § 1833(b), Van Buren, Winter, McLaren Macomb

How This Toolkit Is Organized

Ten pillars, each giving the doctrine, the anchors, the trap and its second order consequence, and where to go deeper. Then the authority shelf, then two appendices: a covenant-design decision matrix and a jurisdictional triage table.

The narrative entry point is The Non-Compete in Retreat: Blue Pencils, Trade Secrets, and the Employee Who Walks. The doctrinal treatment is Restrictive Covenants and Employee Mobility: A Comprehensive Guide. The operational sequence is Drafting and Enforcing a Non-Compete: A Practical Checklist.

The running matters throughout this cluster are Halyard Diagnostics, Inc. (fictional), a Chicago clinical instrument and assay software company; Marisol Trevino (fictional), its Colorado-based VP of Commercial Strategy; Dov Achterberg (fictional), its Massachusetts-based principal assay-algorithm engineer; and Kestrel Analytical, Inc. (fictional), the San Diego competitor that hires both.

Pillar 1 — The Protectable Interest and the Reasonableness Framework

Doctrine. A covenant restraining trade is presumptively void and enforceable only as an exception: ancillary to a valid relationship, supported by a legitimate business interest, and no broader than necessary in duration, geography, and scope of activity. Ordinary competition is never a protectable interest.

Anchors. Reed, Roberts Associates, Inc. v. Strauman, 40 N.Y.2d 303, 353 N.E.2d 590 (1976) (general skill and knowledge belong to the employee). Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871, 965 N.E.2d 393 (totality of the circumstances). BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 712 N.E.2d 1220 (1999) (overbreadth as to clients the employee never served). Fla. Stat. § 542.335 (enumerated interests; presumptions by duration; courts may not weigh individualized hardship). Model Rule of Professional Conduct 5.6 (lawyer covenants prohibited).

Trap. The "any capacity" clause. A covenant barring employment with a competitor in any role restrains conduct that threatens no interest, and it is the single most frequent ground for judicial refusal. Restrict roles and product lines.

Trap, second order. One template for two different interests. A goodwill covenant and an information covenant protect different things and should look different. Applying a sales-force template to an engineer produces a covenant tailored to nothing — and the employer's own declaration, when finally written, will describe an interest the clause does not match.

Go deeper: Guide Parts I–II, IV · Checklist Phase 2

Pillar 2 — Consideration, Formation, and Assignment

Doctrine. A covenant requires consideration under the governing state's rule, must be formed with any statutorily required timing and disclosures, and is not universally assignable in a corporate transaction.

Anchors. 820 ILCS 90 (Illinois Freedom to Work Act: "adequate consideration" defined; 14-day review; counsel advisory), codifying Fifield v. Premier Dealer Servs., Inc., 2013 IL App (1st) 120327. Socko v. Mid-Atlantic Sys. of CPA, Inc., 633 Pa. 555, 126 A.3d 1266 (2015) (statutory seal insufficient). Tex. Bus. & Com. Code § 15.50; Light v. Centel Cellular Co., 883 S.W.2d 642 (Tex. 1994); Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009); Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011). Hess v. Gebhard & Co., 570 Pa. 148, 808 A.2d 912 (2002) (no assignment without an express clause). Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674 (Del. 2024) (employee-choice doctrine for forfeiture provisions).

Trap. The promoted employee. A covenant signed as an entry-level hire is frequently still the only one on file after three promotions — calibrated to an interest the employee no longer has, and sometimes below the state's current income threshold. Re-paper on promotion, role change, and relocation.

Trap, second order. The M&A gap. In an asset deal the covenant must actually transfer, and several states will not enforce an assigned covenant absent an express assignment provision. Diligence lists rarely test this, and the acquirer discovers the gap when the first key employee leaves — which is often within the first year, because that is when retention packages expire.

Go deeper: Guide Part III · Checklist Phases 4, 6

Pillar 3 — The State Statutory Wave

Doctrine. Roughly half the states now regulate non-competes by statute through four moves: flat bans, income thresholds, advance-notice and separate-notice requirements, and mandatory payment or garden leave.

Anchors. Cal. Bus. & Prof. Code § 16600 and Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008). Minn. Stat. § 181.988. C.R.S. § 8-2-113 (threshold; trade-secret purpose; separate signed notice; per-worker penalty). M.G.L. c. 149 § 24L (12-month cap; garden leave of at least 50% of highest base salary or other agreed consideration; 10 business days' notice; unenforceable against employees terminated without cause). RCW 49.62 (threshold; 18-month presumption; payment on layoff). ORS 653.295 (12-month cap; two weeks' notice; post-termination copy). 820 ILCS 90. Va. Code § 40.1-28.7:8 (low-wage ban, extended in 2025 to overtime-eligible employees). Fla. Stat. §§ 542.41–542.45 (2025 CHOICE Act: covenants up to four years for covered high earners, with garden leave).

Trap. Treating this as a substantive-limits problem. It is a paperwork problem. The covenant handed over on the first morning is void in Massachusetts, Oregon, and Colorado regardless of how carefully its terms were drafted, and no reformation doctrine rescues a formation defect.

Trap, second order. Stale thresholds. The figures are indexed and republished annually by state labor agencies. An employer that set its policy against the 2023 number is out of compliance by 2026 for the band of employees between the two figures — and those are exactly the mid-level employees a company restricts in volume, so the exposure is multiplied by headcount and, in Colorado and Washington, by a statutory per-worker penalty.

Go deeper: Guide Part V · Checklist Phases 1, 4

Pillar 4 — The FTC Rule and Federal Competition Authority

Doctrine. The Federal Trade Commission's categorical ban on non-competes was set aside by a district court and abandoned on appeal, but the Commission's case-by-case authority under Section 5 to challenge non-competes as unfair methods of competition is unaffected.

Anchors. 16 C.F.R. Part 910, 89 Fed. Reg. 38342 (May 7, 2024). 15 U.S.C. § 45 (Section 5); § 46(g) (Section 6(g)). Ryan LLC v. FTC, No. 3:24-cv-00986 (N.D. Tex. Aug. 20, 2024) (rule set aside; no substantive competition rulemaking authority; arbitrary and capricious). ATS Tree Services, LLC v. FTC, No. 2:24-cv-01743 (E.D. Pa. July 23, 2024) (preliminary injunction denied). Properties of the Villages, Inc. v. FTC, No. 5:24-cv-00316 (M.D. Fla. Aug. 15, 2024) (stay on major questions grounds). Appeals to the Fifth and Third Circuits voluntarily dismissed in September 2025. 5 U.S.C. § 706 (scope of "set aside"). FTC consent orders requiring rescission of non-competes, 2023 and 2025.

Trap. Reading the rule's failure as deregulation. The rule would have preempted a patchwork; its demise leaves the patchwork, which is more burdensome for a multistate employer than a single federal standard would have been. Employers that stood down their 2024 compliance projects still owe the state-by-state work.

Trap, second order. Forgetting that adjudication does not depend on rulemaking authority. Ryan held the Commission cannot promulgate substantive competition rules under § 6(g); it did not hold that a particular non-compete program cannot be an unfair method of competition in an administrative proceeding. An employer imposing covenants on low-wage workers with no articulable protectable interest remains exposed, and the 2025 consent orders and warning letters show the Commission using that route.

Go deeper: Guide Part VI · The Death of Deference

Pillar 5 — Blue Pencil, Reformation, and Red Pencil

Doctrine. What a court does with an overbroad covenant varies by state along three lines: void it entirely, strike severable words only, or rewrite it to what is reasonable.

Anchors. Wis. Stat. § 103.465 (void "even as to any part... that would be a reasonable restraint"); Star Direct, Inc. v. Dal Pra, 2009 WI 76, 319 Wis. 2d 274; Manitowoc Co. v. Lanning, 2018 WI 6, 379 Wis. 2d 189. Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523, 380 S.E.2d 357 (1989) (strict blue pencil). Raimonde v. Van Vlerah, 42 Ohio St. 2d 21, 325 N.E.2d 544 (1975) (reformation). Tex. Bus. & Com. Code § 15.51(c) (shall reform, but no damages for pre-reformation breach). Fla. Stat. § 542.335(1)(c); NRS 613.195(6), superseding Golden Road Motor Inn, Inc. v. Islam, 132 Nev. 476, 376 P.3d 151 (2016). Kodiak Bldg. Partners, LLC v. Adams, 2022 WL 5240507 (Del. Ch. 2022); Sunder Energy, LLC v. Jackson, 305 A.3d 723 (Del. Ch. 2023), aff'd in relevant part, 2024 WL 5052901 (Del. 2024).

Trap. Assuming rescue. Counsel who practice mainly in reformation states draft aggressively because a judge will trim. The identical covenant in Wisconsin, Nebraska, or Virginia is a total forfeiture of protection, and a severability clause does not change the Wisconsin result because the statute addresses severability directly.

Trap, second order. Texas's damages penalty. Section 15.51(c) mandates reformation and then denies the employer damages for any breach occurring before reformation — which is virtually all of the harm. An overbroad Texas covenant therefore buys prospective injunctive relief only, and the employer that drafted aggressively because "Texas will fix it" has traded away its damages case.

Go deeper: Guide Part VII · Checklist Phase 3

Pillar 6 — Choice of Law, Forum, and Anti-Enforcement Statutes

Doctrine. The chosen law and forum ordinarily control, but several states now void both by statute for workers based there — and one makes the attempt to enforce independently actionable.

Anchors. Restatement (Second) of Conflict of Laws §§ 187, 188. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972); Atlantic Marine Constr. Co. v. U.S. District Court, 571 U.S. 49 (2013); 28 U.S.C. § 1404(a). Cal. Lab. Code § 925. Cal. Bus. & Prof. Code § 16600.5 (void "regardless of where and when" signed; attempted enforcement unlawful; mandatory fees). C.R.S. § 8-2-113(8). RCW 49.62.050. Minn. Stat. § 181.988. Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364, 34 N.E.3d 357 (2015). Advanced Bionics Corp. v. Medtronic, Inc., 29 Cal. 4th 697, 60 P.3d 1200 (2002). Application Group, Inc. v. Hunter Group, Inc., 61 Cal. App. 4th 881 (1998). Oxford Global Resources, LLC v. Hernandez, 480 Mass. 462, 106 N.E.3d 556 (2018).

Trap. The demand letter. It is courteous, it is usually required by internal escalation policy, and in a state with an anti-enforcement statute it hands the employee a week's head start to file a declaratory judgment action in her home forum — with a fee-shifting claim attached. Decide the forum question before deciding whether to write.

Trap, second order. Fee exposure for enforcing at all. Under § 16600.5 the attempt to enforce a void non-compete against a California worker is itself unlawful and carries mandatory attorney's fees for a prevailing employee. An enforcement decision made on litigation-risk grounds alone, without pricing the affirmative claim it creates, has produced fee awards larger than the underlying dispute.

Go deeper: Guide Part VIII · Personal Jurisdiction, Venue, and Forum Selection

Pillar 7 — Non-Solicitation and No-Poach Antitrust

Doctrine. Customer and employee non-solicitation covenants between an employer and its own worker are vertical restraints judged for reasonableness. An agreement between competing employers not to hire or solicit each other's workers is a horizontal labor-market allocation and can be criminal.

Anchors. BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999). NRS 613.195(2) (no restriction on serving a customer who voluntarily seeks the employee). Bankers Life & Cas. Co. v. American Senior Benefits LLC, 2017 IL App (1st) 160687 (generic LinkedIn post is not solicitation); Mobile Mini, Inc. v. Vevea, 2017 WL 3172712 (D. Minn. 2017) (targeted post is). AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., 28 Cal. App. 5th 923 (2018), questioning Loral Corp. v. Moyes, 174 Cal. App. 3d 268 (1985). North American Senior Benefits, LLC v. Wimmer, 368 Ga. App. 124, 889 S.E.2d 1 (2023), under O.C.G.A. §§ 13-8-50 to -59 — verify current status. 15 U.S.C. § 1; DOJ/FTC Antitrust Guidelines for Business Activities Affecting Workers (Jan. 2025), replacing the 2016 HR guidance. United States v. Jindal (E.D. Tex. 2022); United States v. DaVita Inc. (D. Colo. 2022); United States v. Patel (D. Conn. 2023); first wage-fixing jury conviction (2025). Deslandes v. McDonald's USA, LLC, 81 F.4th 699 (7th Cir. 2023). Aya Healthcare Servs., Inc. v. AMN Healthcare, Inc., 9 F.4th 1102 (9th Cir. 2021).

Trap. Reading the criminal acquittals as safety. Jindal, DaVita, and Patel reflect proof problems on specific facts, not abandonment of the theory — and the DaVita court expressly held a non-solicit can be a per se unlawful market allocation. An indictment alone is ruinous regardless of the verdict.

Trap, second order. The settlement clause. Two general counsel resolving a departure dispute frequently agree, verbally or in writing, that neither will hire from the other for a period. That is a horizontal restraint in the labor market and it does not become lawful because it sits in a settlement agreement. The same exposure hides in staffing contracts, joint venture terms, and M&A no-hire provisions that outlive the deal.

Go deeper: Guide Parts IX–X · Checklist Phases 6, 12

Pillar 8 — Confidentiality, Invention Assignment, and Statutory Notices

Doctrine. Confidentiality and invention assignment agreements survive in states where non-competes do not, which makes them the durable core of the package — and they carry mandatory notices whose omission forfeits remedies.

Anchors. 18 U.S.C. § 1833(b)(3) (DTSA whistleblower immunity notice; omission bars exemplary damages and fees). 17 C.F.R. § 240.21F-17 (no impeding SEC communication). Speak Out Act, 42 U.S.C. §§ 19401–19404. Board of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Systems, Inc., 563 U.S. 776 (2011); FilmTec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (Fed. Cir. 1991); Omni MedSci, Inc. v. Apple Inc., 7 F.4th 1148 (Fed. Cir. 2021). Cal. Lab. Code §§ 2870–2872; RCW 49.44.140; 765 ILCS 1060; Minn. Stat. § 181.78; N.C. Gen. Stat. §§ 66-57.1 to -57.2. 17 U.S.C. § 101; Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989).

Trap. The missing § 1833(b) notice. One paragraph, free to include, and its absence strips exemplary damages and attorney's fees from the DTSA claim against that employee. It is missing from a startling share of agreements drafted since 2016, including many produced by sophisticated firms using pre-2016 forms.

Trap, second order. "Agrees to assign." A promise to assign creates only an obligation, and a later present assignment to a third party can defeat it — the Stanford v. Roche problem. The consequence surfaces years later in patent diligence or in an infringement suit where standing turns on chain of title, and the cure requires the cooperation of a former employee who has no reason to give it. Use "hereby assigns," add a cooperation covenant, and add a power of attorney.

Go deeper: Guide Part XI · Checklist Phase 5

Pillar 9 — Trade Secrets Under the DTSA and UTSA

Doctrine. Trade secret law protects information that derives value from secrecy and is subject to reasonable measures, and it reaches misappropriation regardless of whether a covenant exists — which is why it now carries most of the employer's leverage.

Anchors. Defend Trade Secrets Act, 18 U.S.C. §§ 1836–1839 — § 1839(3) (definition), § 1839(5) (misappropriation), § 1836(b)(2) (civil seizure), § 1836(b)(3) (injunctions, damages, exemplary damages, fees), § 1836(d) (three-year limitations). Uniform Trade Secrets Act § 7 (displacement of conflicting state tort remedies). Economic Espionage Act, 18 U.S.C. §§ 1831–1832. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974). E.I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970). PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995); Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443 (2002); EarthWeb, Inc. v. Schlack, 71 F. Supp. 2d 299 (S.D.N.Y. 1999); Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010). Cal. Civ. Proc. Code § 2019.210 (identification with reasonable particularity). Van Buren v. United States, 593 U.S. 374 (2021), construing 18 U.S.C. § 1030.

Trap. Pleading inevitable disclosure under the DTSA. Section 1836(b)(3)(A)(i) forbids an injunction preventing a person from entering into an employment relationship and requires that employment conditions rest on evidence of threatened misappropriation and not merely on the information the person knows. Import the state doctrine only where the state accepts it, and know that California rejects it outright.

Trap, second order. Vague identification. A plaintiff who describes its secrets as "confidential customer, pricing, and technical information" loses the discovery fight, then loses the summary judgment motion, because the defense can neither test the claim nor be found to have used anything specific. Identify with particularity early and accept the narrowing — a precise claim about one calibration model beats a sprawling claim about everything.

Go deeper: Guide Part XII · Checklist Phase 8

Pillar 10 — Emergency Relief, Forensics, and Competitive Hiring

Doctrine. Departure cases are decided at the preliminary injunction stage on a record built in days, from evidence that is created before the resignation and routinely destroyed after it.

Anchors. Fed. R. Civ. P. 65 (65(b) ex parte requirements; 65(c) bond); Fed. R. Civ. P. 26(d)(1) (expedited discovery); Fed. R. Civ. P. 37(e) (ESI spoliation; adverse inference requires intent to deprive); Fed. R. Civ. P. 45. Winter v. NRDC, Inc., 555 U.S. 7 (2008); eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 565 N.E.2d 415 (1991) (preparing to compete versus competing). Phansalkar v. Andersen Weinroth & Co., 344 F.3d 184 (2d Cir. 2003) (faithless servant). Restatement (Second) of Torts §§ 766, 768 (tortious interference; competition privilege). McLaren Macomb, 372 NLRB No. 58 (2023); Stericycle, Inc., 372 NLRB No. 113 (2023) — General Counsel memoranda on non-competes and "stay-or-pay" rescinded in February 2025, with the Board lacking a quorum for much of 2025.

Trap. Letting internal IT examine the laptop first. It alters metadata, makes the forensic report contestable, and converts a hearing about 4,100 copied files into a hearing about chain of custody. Preserve and image before anyone looks.

Trap, second order. Asking for an order the court cannot administer. "Defendant shall not compete" invites contempt litigation about definitions and is often denied outright; "Defendant shall not contact the eleven customers listed in Exhibit C through September 30" is granted and works. On the hiring side, the equivalent second-order point is timing: an onboarding certification and documented work assignment created before the offer is dispositive evidence, and the same documents created after the complaint read as litigation artifacts.

Go deeper: Guide Parts XIII–XIV · The Extraordinary Remedy

The Authority Shelf

Federal statutes and rules

Regulations and agency materials

  • 16 C.F.R. Part 910 (FTC non-compete rule, set aside in Ryan)
  • 17 C.F.R. § 240.21F-17 (SEC whistleblower protection; impeding communications)
  • DOJ Antitrust Division and FTC, Antitrust Guidelines for Business Activities Affecting Workers (Jan. 2025)
  • NLRB General Counsel memoranda on severance agreements and non-competes (issued 2023–2024; rescinded February 2025 — cite for history, not authority)
  • FTC consent orders and warning letters concerning non-competes (2023; 2025)

State statutes

Leading cases — covenants

  • Reed, Roberts Assocs., Inc. v. Strauman, 40 N.Y.2d 303 (1976) · Karpinski v. Ingrasci, 28 N.Y.2d 45 (1971) · BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999) · Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015) · Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008) · AMN Healthcare v. Aya Healthcare Servs., 28 Cal. App. 5th 923 (2018) · Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871 · Fifield v. Premier Dealer Servs., 2013 IL App (1st) 120327 · Socko v. Mid-Atlantic Sys., 633 Pa. 555 (2015) · Hess v. Gebhard & Co., 570 Pa. 148 (2002) · Light v. Centel Cellular Co., 883 S.W.2d 642 (Tex. 1994) · Alex Sheshunoff Mgmt. Servs. v. Johnson, 209 S.W.3d 644 (Tex. 2006) · Mann Frankfort Stein & Lipp Advisors v. Fielding, 289 S.W.3d 844 (Tex. 2009) · Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) · Raimonde v. Van Vlerah, 42 Ohio St. 2d 21 (1975) · Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989) · Star Direct, Inc. v. Dal Pra, 2009 WI 76 · Manitowoc Co. v. Lanning, 2018 WI 6 · Golden Road Motor Inn v. Islam, 132 Nev. 476 (2016) · Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674 (Del. 2024) · Sunder Energy, LLC v. Jackson, 305 A.3d 723 (Del. Ch. 2023) · Oxford Global Res., LLC v. Hernandez, 480 Mass. 462 (2018)

Leading cases — trade secrets, antitrust, and procedure

  • Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974) · E.I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970) · PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995) · Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443 (2002) · EarthWeb, Inc. v. Schlack, 71 F. Supp. 2d 299 (S.D.N.Y. 1999) · Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010) · Van Buren v. United States, 593 U.S. 374 (2021) · Deslandes v. McDonald's USA, LLC, 81 F.4th 699 (7th Cir. 2023) · Aya Healthcare Servs. v. AMN Healthcare, 9 F.4th 1102 (9th Cir. 2021) · Winter v. NRDC, Inc., 555 U.S. 7 (2008) · eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) · Atlantic Marine Constr. Co. v. U.S. Dist. Court, 571 U.S. 49 (2013) · Bd. of Trustees of Stanford Univ. v. Roche Molecular Sys., 563 U.S. 776 (2011)

Secondary sources

  • Restatement (Second) of Contracts §§ 186–188 (restraint of trade); Restatement (Third) of Unfair Competition §§ 39–45 (trade secrets); Restatement (Second) of Torts §§ 766, 768; Restatement (Second) of Conflict of Laws §§ 187–188
  • Milgrim & Bensen, Milgrim on Trade Secrets — the standard reference
  • Malsberger, Covenants Not to Compete: A State-by-State Survey (ABA Section of Labor and Employment Law) — the single most useful practitioner resource in this field
  • Pooley, Trade Secrets (Law Journal Press)
  • Rothman, Employment Law Deskbook; Lindemann, Grossman & Weirich, Employment Discrimination Law (ABA) for adjacent doctrine
  • ABA Journal of Labor & Employment Law; Berkeley Technology Law Journal; Harvard Law Review and Michigan Law Review on the empirical non-compete literature
  • Orly Lobel, Talent Wants to Be Free (Yale Univ. Press) — the policy case for mobility, and the best entry point to the empirical debate
  • Evan Starr and coauthors, empirical work on non-compete prevalence and wage effects — the research the FTC rulemaking record relied on, and worth reading alongside its critics
  • FTC Notice of Proposed Rulemaking and Final Rule preambles, 88 Fed. Reg. 3482 (Jan. 19, 2023) and 89 Fed. Reg. 38342 (May 7, 2024) — the most complete assembly of the evidence, whatever one concludes about the rule
  • Sedona Conference Commentary on Protecting Trade Secrets and its ESI preservation guidance

Appendix A — Covenant Design Decision Matrix

Work down the rows. Each answer changes the instrument, not just its terms.

Question If yes If no
Does the employee hold customer goodwill the employer paid to create? Customer non-solicit, defined by actual service in a 12–24 month lookback Do not restrict customers
Does the employee hold genuine technical secrets? Confidentiality plus a narrow activity-based restraint on the specific product line Confidentiality alone
Is the employee in a banned state? Confidentiality and invention assignment only; consider a paid notice period Continue
Does compensation clear the current indexed threshold? Continue Non-compete is void; use non-solicit if it clears the lower threshold
Does the state require advance notice or a separate signed notice? Build it into onboarding with a dated record Continue
Does the state require garden leave or payment? Put the payment obligation in the agreement itself Continue
Is the state red pencil or strict blue pencil? Draft conservatively; add cascading step-downs Reformation may narrow, but do not rely on it
Does an anti-enforcement statute apply to this worker? Select that state's law and forum; do not fight it A neutral chosen forum is available
Will the employer ever want damages in Texas? Draft to the reasonable limit — reformation bars pre-reformation damages Continue
Is a hiring standstill with another company contemplated? Antitrust counsel, written, ancillary, narrow, time-limited — or do not do it Continue
Does the agreement govern confidential information? DTSA § 1833(b) notice is mandatory; add agency and Section 7 carve-outs Continue
Does the employee create IP? "Hereby assigns," state statutory notice, prior-inventions schedule, cooperation covenant and power of attorney Continue

Appendix B — Jurisdictional Triage

Answer these before drafting, and again before enforcing. Getting any wrong is usually fatal and rarely curable.

  1. Where did this employee physically work for the last twelve months? That governs, not the contract's choice-of-law clause.
  2. Is a non-compete banned in that state, and does the ban reach non-solicitation too?
  3. What is the current indexed threshold, republished this year, for each covenant type?
  4. What advance notice was required — business days or calendar days — and can delivery be proved?
  5. Was a separate signed notice required, and does it exist?
  6. Is garden leave or payment a condition, and is the obligation stated in the agreement?
  7. What consideration did the state require, and was it given?
  8. Is the employee in an excluded category: non-exempt, laid off, terminated without cause, a regulated occupation?
  9. Is the state red pencil, strict blue pencil, or reformation — and was the covenant drafted for that answer?
  10. Does an anti-enforcement statute void the choice-of-law or forum clause, and does attempting to enforce create a fee-shifting claim?
  11. Who files first, and does a demand letter forfeit the forum?
  12. Is the DTSA § 1833(b) notice present? If not, exemplary damages and fees are gone.
  13. Can the trade secret be identified with reasonable particularity, and can reasonable measures be proved?
  14. Is there evidence of threatened misappropriation, or only knowledge — and does the state accept inevitable disclosure?
  15. Is there any agreement between employers about hiring or pay anywhere in the file, including settlements?
  16. Has a litigation hold issued and has forensic imaging occurred before anyone examined the device?
  17. What order could the court actually administer, and what is the realistic bond?

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