Employer Cannot Be Liable for Interfering with Non-Compete It Doesn’t Know Exists, Third Circuit Holds

Ethan Simon

simonRestrictive covenants are common in many industries. Under New Jersey and Pennsylvania law, a defendant may be liable for tortious interference with a restrictive covenant only if it has actual knowledge of the contract with which it allegedly interferes. In Acclaim Systems, Inc. v. Infosys, Ltd.,[1] the Third Circuit reaffirmed this rule in the context of IT consulting non-competes and expressed its reluctance to recognize any exceptions.

In Acclaim Systems, Time Warner Cable (“TWC”) was looking to cut costs on its Sales Force Dot Com (“SFDC”) project by switching providers for certain IT services. When TWC switched from Acclaim to Infosys, TWC asked Infosys to consider retaining four individuals who were already working on SFDC on behalf of Acclaim. All of these individuals had non-competes with Acclaim that prohibited them from working on SFDC on behalf of Infosys. Continue reading “Employer Cannot Be Liable for Interfering with Non-Compete It Doesn’t Know Exists, Third Circuit Holds”

Third Circuit Enforces Non-Compete Agreement Posted on Internet

Jonathan Korn

aa559a96d2ef7db0cff214478e922bd7Our society is becoming increasingly paperless. As a result, our courts are constantly confronting factual scenarios that could not be contemplated ten years ago. In the latest example, the Third Circuit recently affirmed the enforceability of a non-compete agreement posted online. ADP, LLC v. Jordan Lynch, No. 16-3617 (3d Cir. Feb. 7, 2017).

ADP sought to enforce a non-compete agreement against two employees who had left to work for a direct competitor. The non-compete was for one year and prohibited the employees from soliciting current and prospective clients. The District Court enforced the non-solicitation clause but declined to enjoin the employees from working for the competitor. The employees appealed the injunction order claiming that the District Court erred because there was nothing to prove that they agreed to the contents of the non-compete, despite their affirmance that they read it. Continue reading “Third Circuit Enforces Non-Compete Agreement Posted on Internet”

Third Circuit Recognizes “Subgroup” ADEA Disparate-Impact Claims

Anna D. Stockman

Anna D. StockmanThe Third Circuit’s January 10, 2017 decision regarding an employer’s age-based liability under the Age Discrimination in Employment Act (“ADEA”) should serve as a call to action to employers to evaluate and review their policies to ensure that they do not inadvertently violate the ADEA by discriminating against individuals who are in “subgroups” over 40 years old.

Most employers know that the plain language of the ADEA protects “individuals who are at least 40 years of age,” and its disparate impact provision prohibits an employer from “adversely affect[ing an employee’s] status . . . because of such individual’s age.” But in Karlo v. Pittsburgh Glass Works, the Third Circuit made employers’ lives a little more complicated by holding that “‘subgroup’ disparate-impact claims are cognizable under the ADEA.” In other words, the Third Circuit held that under the ADEA, employees in a subgroup older than 40 years old—in Karlo, the subgroup of employees was 50-and-older—can bring disparate impact claims against their employer alleging that they were “disfavored relative to younger employees,” even if the younger employees were 40 years old or older. Continue reading “Third Circuit Recognizes “Subgroup” ADEA Disparate-Impact Claims”

District Court Grants Injunctive Relief Blocking December 1 Implementation of New DOL Overtime Rule

Mark Blondman, Jason E. Reisman, and Joel Michel

Yesterday, Judge Mazzant of the United States District Court for the Eastern District of Texas granted a nationwide preliminary injunction blocking the Department of Labor’s (“DOL”) new regulation governing the Fair Labor Standards Act (“FLSA”) white collar exemptions. The rule, which would have more than doubled the minimum salary threshold for the white collar exemption from $455 per week (or $23,660 per year) to $913 per week (or $47,476 per year), was scheduled to become effective December 1, 2016.

Background and Analysis

In October, 21 states filed an emergency motion for a preliminary injunction to prevent the implementation of the new regulation. The states argued that the DOL exceeded its authority by making the salary threshold too high and by providing for automatic adjustments to the threshold every three years. Last month, the states’ case was consolidated with another lawsuit filed by the U.S. Chamber of Commerce and other business organizations, which raised similar objections to the rule. Continue reading “District Court Grants Injunctive Relief Blocking December 1 Implementation of New DOL Overtime Rule”