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Does erosion of noncompetes in the DMV herald a national trend?

April 7, 2021 By Nancy Cleveland

Noncompetition agreements are common tools used by employers to prevent former employees from unfairly competing against them.  Traditionally, many states have allowed employers to require employees to sign noncompetes as long as they were reasonable in scope and protected an employer’s legitimate business interests.  In turn, employers often required every employee to sign a noncompete even when it was unlikely that certain employees, particularly those in lower-wage positions, really posed much of a future competitive threat.  In recent years, in response to the overuse of noncompetes by employers, several states have passed legislation limiting their use – with the trend most acutely taking hold in the area surrounding Washington, D.C.  Is the activity in the DMV an anomaly, or does it demonstrate the larger national picture?

Continue reading at:  JD Supra

Filed Under: Contracting Tips Tagged With: employment law, noncompete contracts

Non-compete clauses in government contracting: a case study in enforceability

February 22, 2021 By Nancy Cleveland

Government contractors compete in a market that depends on proprietary approaches that frequently involve unique experience, expertise, or key employees.  Because the stakes are so high and the competition fierce, government contractors often make significant investments to attract, train, and retain talented employees, and develop unique technical and management processes to gain a competitive advantage.  The loss of an employee to a competitor has the potential to harm a contractor’s new business prospects and dilute its competitive advantages.  For those reasons, non-compete clauses can be an attractive option for a government contractor to protect its business.

Every jurisdiction applies its own test to determine whether a non-compete agreement is enforceable; some will not honor restrictive covenants at all.  For the jurisdictions that do, courts generally consider, among other factors, whether the scope of the agreement (i) is narrowly tailored to the employer’s legitimate business interest, (ii) is unduly burdensome on the employee’s ability to earn a living, or (iii) violates public policy.  Non-compete clauses are generally difficult to enforce, but government contracting is the rare business where specific personnel and the knowledge they possess are the competitive advantage, often making the difference between winning or losing a contract.  Even then, however, the strong interest the government has in securing the best personnel for the job may lead to a restrictive covenant being void as against public policy.

This article discusses several strategies to consider when drafting non-compete clauses for use in government contracting contexts.  It encourages specificity through narrowly-tailored terms.  It also includes a Case Study that shows how the circumstances of a unique situation might be able to save a government contractor from an otherwise broad and unenforceable non-compete clause.

Continue reading at:  Wiley

Filed Under: Contracting Tips Tagged With: noncompete contracts

FEMA is spending billions, and some questionable companies are getting work

October 26, 2017 By Nancy Cleveland

This year’s record hurricane season has led to the biggest spike in government disaster contracts in more than a decade, testing the government’s ability to manage the unpredictable and growing costs of climate change.

Since Hurricane Harvey struck Texas on Aug. 25, the Federal Emergency Management Agency has awarded $2.2 billion in contracts, according to data compiled by Bloomberg Government.

That’s about twice what the agency typically awards over an entire year.

Keep reading this article at: https://www.bloomberg.com/news/articles/2017-10-19/fema-is-spending-billions-and-some-questionable-companies-are-getting-work

Filed Under: Contracting News Tagged With: DHS, disaster response, FEMA, GAO, noncompete contracts, recovery

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