Connecticut Legislature Restricts the Use of Non-Compete Agreements: Late last month the Connecticut General Assembly passed “An Act Concerning Employer Use of Noncompete Agreements” (the “Act”).
Effective October 1, 2013, the Act will dramatically alter how employers approach mergers and acquisitions. Specifically, under this new law: If, after a merger or an acquisition, an employee is being hired by, or continuing his or her employment with, the surviving entity, and the surviving entity intends to bind the employee to non-competition restrictions, then the employer must provide the employee with a written copy of the non-compete agreement and at least seven (7) days to consider signing the agreement.
While inconvenient for employers, the Act, on its face, isn’t particularly alarming. However, the practical implications are considerable. For example, as a result of this new law, employers may be forced to inadvertently give employees advance notice of possible business transactions, such as closings or consolidations. Ultimately, notice of plant closings resulting from mergers or acquisitions will be dictated by legislative fiat—not business necessity or the unique culture of each organization.
Furthermore, employers must also now consider the possibility that an existing employee might balk at signing a new non-compete agreement, thereby complicating—and perhaps even jeopardizing—a merger or acquisition.
Bottom Line for Employers:
Effectively navigating a business merger or acquisition has never been easy. And with passage of the new Act, life for Connecticut’s employers just became a bit more complicated. For assistance in adhering to this new law, contact Bud O’Donnell.
On Tuesday, May 7, 2013, the United States Court of Appeals for the District of Columbia issued another decision against the National Labor Relations Board. This time, the court found that the NLRB had exceeded its authority when it issued the rule requiring employers covered by the National Labor Relations Act to post a notice informing workers of their right to unionize. (This same court, in January, 2013, invalidated the NLRB recess appointments made by President Obama; the NLRB has appealed that decision, Noel Canning v. NLRB, to the U.S. Supreme Court.)
In this most recent decision, National Association of Manufacturers v. NLRB, 717 F.3d 947 (2013), the court concluded that the NLRB’s rule was in violation of the National Labor Relations Act because it subjected an employer to an unfair labor practice for the failure to post this notice; and because it infringed upon the First Amendment right to free speech by forcing a company to disseminate a view that it did not agree with (i.e., the right to unionize).
Section 8(c) of the National Labor Relations Act grants employers the right to express “any view, argument or opinion, or dissemination thereof, whether in written, printed, graphic or visual form.” As long as there is no threat of reprisal, these communications are protected from being treated as unfair labor practices. The court stated that the NLRB’s rule violated Section 8(c) because “the right to disseminate another’s speech necessarily includes the right to decide not to disseminate it.”
While this decision represents another significant setback to the NLRB, the court’s decision also raises the possibility that its rationale could be extended to other federal notice-posting requirements that have been imposed on employers by various agencies (i.e., OSHA and the EEOC). It remains to be seen whether this decision will generate that type of litigation.Read More