1. Tahl Tyson, Littler Shareholder (Seattle, London)
Restrictive Covenants, Here and There: Legal Update for the US, Strategic Considerations Internationally
Brian Flock, Senior Attorney, Global Employment & Migration Law, Microsoft Corporate, External & Legal Affairs Office; Annie Ruben, Littler Shareholder;
Tahl Tyson, Littler Shareholder (Seattle, London)
Thursday, January 17th, 2019

2. US Legal Update Massachusetts Noncompetition Act
Applies to contracts entered into on or after October 1, 2018
Requires garden leave or other agreed upon consideration
One year limitation
Excludes low wage earners
Excludes laid off employees and employees discharged without cause
Illnois adopted the “Janitor Rule”
Medix Staffing Solutions Inc. v. Dumrauf

3. US Legal Update Viability of employee nonsolicits in California
AMN Healthcare v. Aya Healthcare
Staffing Industry
Subject workers were recruiters who placed temporary nurses. Barring those workers from soliciting AMC clients was to bar them from doing theirs jobs.
New York rejects noncompete agreements for low level employees
Employee noncompetes treated as noncompetes under Wisconsin law
Manitowoc Company v. Lanning, 2018 WI 6 (2018)
Reasonable limits required

4. Noncompetes and Mobile Employees
What situations arise in which we need to consider choice of law and jurisdiction?
Ask 2 related questions:
Which country’s employment laws apply?
To what extent is a choice of law provision enforceable?
The General Rule: employee protections are territorial to the place of employment
countries that only protect citizens may permit choice of law for expats
EU under Rome I applicable law is the “habitual” place of work
UK “place of the “strongest connection” (can include British “enclaves”
Q for collateral litigation: Which place of work is “habitual”, has the strongest connection?

5. Rome I Regulation (2008) on Conflict of Laws
Parties can pick applicable law but “overriding mandatory provisions” of the law of the forum trump choice of foreign law clause or foreign contract
“Overriding mandatory provisions” = those considered crucial to public interest
e.g. restrictive covenants
Choice of law provision cannot:
deprive employee of rights that under the forum’s laws he could not sign away
override the law of any country more closely connected with the circumstances
Landmark UK cases Samengo-Turner, Duarte, not deferring to choice of law, forum

6. Practical Recommendations
Use place of work choice of law
Foreign/hibernating employment contracts:
layer covenants- one for home country one for assignment
terminate assignment and return assignee to home country and follow local law to ensure validity of underlying contract’s restrictive covenants under home country law

7. Choice of Forum Clauses
Recast Brussels Regulation Codifies general rule for EU:
Employees outside the US usually need not litigate employment disputes outside their place of employment even if a choice of foreign forum clause purports to require otherwise.
What about arbitration clauses?

8. Best Practice: Use a Local Form of Restrictive Covenant
Drafting may depend on whether and how words may be severed
some jurisdictions will not sever, or not just a word, only a whole part
Terms may require different definitions
e.g. confidentiality in UK must be spelled out specifically (very long)
adding a catch-all may invalidate the whole thing for over-breadth
Ensure the locally applicable carve outs are included
e.g. confidentiality does not prevent reporting bad acts to authorities
Consider whether and when you can waive restriction (avoid compensation)
Consider requiring fresh restrictions to be executed upon promotion

9. Signatures CAUTION: Different countries have different requirements
Who signs on behalf of employer
global authority e.g. head of HR
local authority according to local law e.g. legal representative
What if employee fails to sign?
some courts will infer acceptance, some may not e.g. UK
Electronic signatures
issue is adequate proof of authenticating link to specific
individual
eIDAS Regulation applies in EU to permit electronic
signature
UK signature as a deed must be witnesses in person

10. M&A Due Diligence, TUPE
What is local law on assignment of restrictions?
Check language of agreements
if express consent to assignment required is it included?
will definitions make sense, be enforceable upon assignment?
TUPE issue:
employees have the right to object and walk free of their restrictions- they never transfer so those cannot be assigned.

11. IN-HOUSE TIPS RECAP Managing these risks across borders;
Requires strong partnership with knowledgeable counsel
Strong training for distributed teams, and awareness by distributed management
Strong contracts in this space that anticipate and mitigate some of the potential pitfalls
The value that can come from a central view and approach:
Consistent approach across hiring and departures – consistent reminders, inbound instructions, and risk tolerances
Breadth of experience to guide the business to better outcomes
Good data to help understand real risks, pain points, inform other areas of the business - hiring

12. IN-HOUSE TIPS RECAP unclear decision making conflicting advice
The pitfalls that might come as these kinds of issues are de-centralized
unclear decision making
conflicting advice
poor employee relations outcomes
local decisions that conflict with corporate concerns
Managing client expectations
differing expectations across borders
political issues
who makes the decisions