Litigation Trends 2024

42 | Weil, Gotshal & Manges LLP LITIGATION TRENDS 2024 | 43 T O C E M P A N T I I P C A P R O W C C O N T A C T I N T A P P P A T C C L S E C “[w]hen sophisticated parties agree in a limited partnership agreement that a partner, who voluntarily withdraws from, and then competes with, the partnership, will forfeit contingent post-withdrawal financial benefits, public-policy considerations weigh in favor of enforcing that agreement.” Id. at *13. The Georgia Court of Appeals also held that the Georgia Restrictive Covenants Act requires that an employee nonsolicitation agreement contain a geographic limit. See N. Am. Senior Benefits, LLC v. Wimmer, 889 S.E.2d 361 (Ga. Ct. App. 2023). The decision is significant for existing employee nonsolicitation agreements, which in practice rarely include a geographic component. The Georgia Supreme Court is expected to hear argument in a pending appeal in April 2024. Conclusion Given 2023’s flurry of new legislation (and the activity that has continued and is expected to continue in 2024), employers, particularly those with interstate operations, must be cognizant of the various state-specific requirements in the restrictive covenant arena. And in the face of increasing judicial hostility towards postemployment restrictive covenants and judicial correction of employer overreaching, employers should review their restrictive covenant agreements to ensure the restrictions are no broader than necessary to protect their legitimate business interests. NLRB Pushes the Limit on Worker Protections in 2023 From formal rulemaking and new precedents to internal memorandums, the National Labor Relations Board (“NLRB”) engaged in several efforts in 2023 to overhaul its previous standards and expand protections for workers across the country. McLaren In February 2023, the NLRB issued a significant decision on nondisparagement and confidentiality provisions in McLaren Macomb and Local 40 RN Staff Council, 372 N.L.R.B. No. 58 (2023). At issue there were severance agreements presented to several unionized employees at a Michigan hospital, who were furloughed due to the COVID-19 pandemic. The agreements contained confidentiality and non-disparagement provisions prohibiting the employees from disparaging their employer and disclosing the terms of the agreement without any temporal or subject matter limitations. The NLRB concluded that the employer’s conditioning of severance benefits on the employees’ agreement to the provisions had a chilling effect on the employees’ rights, primarily under Section 7 of the National Labor Relations Act (“NLRA”), which protects employees’ rights to discuss terms and conditions of their employment and to engage in other conduct considered incident to the right to bargain collectively. Regarding the non-disparagement clause, the NLRB reasoned that the provision would improperly restrict the employees from making public statements about workplace issues, while the confidentiality provision would further discourage the employees from filing an unfair labor practice charge or assisting an NLRB investigation. Notably, under the decision, employers who simply offer a severance agreement with those sorts of nondisparagement and confidentiality provisions commit an unfair labor practice in violation of the NLRA. And because of the NLRB’s reliance on Section 7, the decision also applies to certain non-union employers, since Section 7 rights attach to all nonsupervisory employees regardless of union status. Following McLaren, NLRB General Counsel Jennifer Abruzzo issued a memorandum with additional guidance, clarifying that: ■ Non-disparagement provisions that prohibit employee statements about the employer that are “maliciously untrue” (i.e., made with knowledge of their falsity or with reckless disregard for their truth or falsity) are still permissible. Employment E M P

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