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ARTICLE · 29 JUNE 2020

Noncompete Considerations For Employers Implementing COVID-19 Cost-Cutting Measures And Operational Changes

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As COVID-19 continues to spread and economic uncertainty persists, many employers are implementing layoffs, pay cuts, furloughs and other operational changes that could cause them to lose the ability to enforce...

United StatesEmployment and HR
Brian Glenn Patterson
Brian Glenn Patterson
Courtney L. Stahl
Courtney L. Stahl
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As COVID-19 continues to spread and economic uncertainty persists, many employers are implementing layoffs, pay cuts, furloughs and other operational changes that could cause them to lose the ability to enforce their noncompete agreements. Accordingly, before implementing these cost-cutting measures, it is critical for employers to evaluate how such measures could affect the enforceability of their noncompete agreements. To assist with this analysis, we have outlined below the various issues employers faced with these circumstances should consider.1

Layoffs

Before implementing layoffs, employers should determine whether relevant state law would preclude the enforcement of the noncompete agreements applicable to the laid off employees, as this may influence which employees are included in the reduction-in-force.2 Although many states permit the enforcement of noncompete agreements against laid off employees, some states prohibit enforcement against employees who

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