In a per curiam decision released on March 8, 2022, the U.S. Court of Appeals for the Fifth Circuit in New Orleans found that a non-compete agreement was not enforceable because the employee signed it before he was officially hired. Though not published, the decision affirms the district court’s logic and is persuasive in interpreting Louisiana law on non-compete agreements.
The case involved an executive employee for Rouses Enterprises who signed a non-compete agreement during the hiring process, but before he was officially employed. His interview was in December 2017, the agreement was signed shortly after, and he was not offered the position until nearly a month later, in January 2018. Following the end of his employment with Rouses in 2020, the employee began working for a competing entity in Texas. Rouses then sued for damages and injunctive relief.
Ultimately, the Fifth Circuit applied statutory interpretation principles and precedent to find that the non-compete agreement was not enforceable. Because Louisiana law disfavors restrictive covenants generally, any variation from the statutory language is strictly construed. The court relied on an earlier state court case finding that a non-compete agreement signed after an employee was terminated was not enforceable because the agreement must be between an “employer” and an “employee.” By that logic, the court held that the employment relationship must be official before signing a non-compete agreement.
So what does this mean for employers? Put simply, Louisiana employers must strictly follow the terms of the statute in implementing non-compete agreements. Restrictive covenants should not be signed before the employment relationship begins, such as during the interview process, nor after the relationship ends. Otherwise, the agreement will likely be found unenforceable. As a best practice, non-compete agreements should be made a part of the onboarding process after a hiring decision has been made, accepted, and the employee has started the position.
Following an extended public comment period that began in January of 2023, the Federal Trade Commission (FTC) voted Tuesday, April 23 to implement a new rule that would effectively ban non-compete agreements nationwide, except in limited circumstances.
January 10, 2023
On January 5, the FTC followed up on President Biden’s July 9, 2021 Executive Order requesting a broad ban on employer non-compete agreements. The proposed rule, based on the proposition that such agreements violate the FTC Act as an unfair competition method, would constitute a total ban on nearly all non-compete agreements.
In a per curiam decision released on March 8, the U.S. Court of Appeals for the Fifth Circuit in New Orleans found that a noncompete agreement was not enforceable because the employee signed it before he was officially hired.
The Coronavirus’s impact on workplaces has led to what many are calling “The Great Resignation.” It’s impacting every industry nationwide, leaving many employers scrambling to retain and replace employees. In this second installment, we’ll discuss strategies for improving workplace culture, staying nimble, and empowering employees to be their authentic selves.
The Coronavirus’s impact on workplaces has led to what many are calling “The Great Resignation. It’s almost impossible to replace employees who are leaving their jobs, and it’s impacting every industry nationwide. In this two-part episode, we’ll discuss what risks law firms face when it comes to attrition, and how firms can proactively guard against losing their best and most talented people.
Diversity initiatives can help “bridge the gap” between an employer’s stated goals for inclusion, but implementing such initiatives requires careful thought and consideration.
January 12, 2022
The Supreme Court is currently considering the validity of two rules promulgated by federal agencies in the past months regarding vaccines and testing in the workplace. Whether those rules—OSHA’s Emergency Temporary Standard (ETS) and the Centers for Medicare and Medicaid Services’ omnibus vaccine rule for healthcare workers (CMS Mandate or Omnibus Rule)— will be upheld is up in the air. Still, employers should be prepared in case those rules do remain in effect, as their enforcement began on Monday, January 10.
November 8, 2021
McGlinchey Stafford is excited to announce that Andrew Albritton has joined the firm’s Labor and Employment group as an associate in the New Orleans office.