It’s been a year of whiplash for workers and lawyers dealing with noncompetes. In April, the Federal Trade Commission banned them nationwide, and it appeared that millions of American workers would be released from their noncompetes. But that wasn’t the end of the story.
In August, a federal judge in Texas ruled that the commission lacked the authority to put the ban in place, blocking it from taking effect. While the judge granted a reprieve for now, the case is expected to proceed to higher courts.
Law Week recently spoke with several lawyers who were recognized as Best Lawyers in the labor and employment and corporate practice areas, and the issues surrounding noncompetes was one that came up repeatedly.
“Non-compete agreements are a very big issue,” Colin Walker, director at Fairfield & Woods, told Law Week via email. “Many state laws have become much stricter regarding non-competes and Colorado’s law, which was amended in 2022, is a good example.”
Walker noted that if the FTC rules survive the court battle, it will be a significant change for many employers.
Katie Pratt and William O’Connell, members at Wells, Anderson & Race, said that they’re seeing an uptick in questions about non-compete agreements.
“There have been several changes at the state and federal levels surrounding non-compete agreements,” Pratt and O’Connell said via email. “Questions abound regarding whether they’re still enforceable, whether there are new requirements, whether non-solicitation agreements remain enforceable, amongst a host of others. Courts are getting involved and some restrictions on non-competes may or may not survive litigation.”
Mark Williams, a member at Sherman & Howard, said that he sees a lot of covenant-not-to-compete and breach of confidentiality agreement litigation.
“The federal FTC Order and resultant Federal case law, coupled with Colorado legislation on the same topic raises many interesting issues for employers to contend with,” Williams told Law Week via email. “We have been fortunate to find our way for clients.”
While the noncompete saga has been a major focus for the Best Lawyers Law Week spoke with, it’s not the only one.
Changes at the State Level
Pratt and O’Connell told Law Week that there have been significant changes to family and medical leave in Colorado.
The first law, passed in 2020, was the Colorado Healthy Families and Workplaces Act, that made it mandatory for employers to provide paid sick leave to their employees.
“There are differences depending on whether we’re in a global pandemic or not,” Pratt and O’Connell said via email. “But all employers must grant a certain set level of paid sick leave.”
Outside of the legislature, Colorado voters passed Proposition 118 in 2020, which Pratt and O’Connell said has become known as the FAMLI Act.
“In the last several years, rules and regulations were drafted to implement the FAMLI Act,” Pratt and O’Connell said. “But unlike the federal FMLA, Colorado’s FAMLI Act applies to all employers and employees within the state (not just large employers), it provides paid leave, and all Colorado employers and employees pay into the program, which is administered by the Colorado Department of Labor and Employment.”
Walker noted that these changes to family and medical leave are presenting challenges for employers in the state. “The Colorado Department of Labor and Employment’s regulations on these laws have presented additional challenges.”
Clay Wire, partner at Ogborn Mihm, told Law Week via email that he has worked on two pieces of legislation with the Colorado Legislature over the past few years. “I’ve been lucky enough to work on efforts to pass the POWR Act and the new Colorado False Claims Act, both of which have increased protections for Colorado workers. My hope is that Colorado remains on the cutting edge of worker protection.”
The POWR Act passed in 2023, and, according to the bill’s summary, it targets discriminatory or unfair employment practices. The Colorado False Claims Act passed in 2022, and the bill makes a person liable for civil penalties if they submit a false claim to the state.
At a more local level, Walker noted that the city of Denver recently passed a new wage claim ordinance that’s stricter than the Colorado Wage Claim Act.
The Denver City Council passed that ordinance, the Civil Wage Theft Ordinance, in 2023, creating new procedures and penalties on wage theft and giving the implementation and enforcement authority to the Denver Auditor’s Office.
Walker was also an active participant in this year’s legislative session. He is chair of the Denver Metro Chamber of Commerce Legal Advisory Committee, which provided him the opportunity to give input on proposed employment legislation.
“In the last legislative session in Colorado, two important bills were proposed, one on wage claims and the other on religious and political speech in the workplace,” Walker said. “The bills passed, but the Governor vetoed them. However, this may not be the end of them. Similar bills may be introduced in the next legislative session.”
Mary Will, partner at Faegre Drinker, is also seeing new laws in Colorado and a growing number of other states that provide a variety of protections to employees.
“Staying on top of new developments can be tricky for Human Resource departments, especially for employers with employees in a number of states,” Will said.
New Case Law and Regulations to Contend with
One of the trends that Wire is seeing in the labor and employment space is related to decisions being made in the federal circuit courts and the U.S. Supreme Court.
“I’m seeing a very unfortunate weakening of the governmental institutions that were built to protect workers, mostly through circuit court and Supreme Court decisions,” Wire said. “The administrative and regulatory framework that has historically been protective of workers is being undermined and rendered toothless.”
A case that’s on the Supreme Court docket that Pratt and O’Connell think all employment practitioners should be on the lookout for is E.M.D. Sales, Inc. v. Carrera.
“The issue is whether the burden of proof that employers must satisfy to demonstrate the applicability of an exemption under the Fair Labor Standards Act is a preponderance of the evidence or clear and convincing evidence,” Pratt and O’Connell said. “The Court’s decision could have sweeping implications across the employment spectrum.”
The pair are also seeing a number of complaints alleging discrimination or harassment.
“We both represent employers in these types of matters and have seen employees being more willing to pursue litigation after the administrative phase is complete,” Pratt and O’Connell said.
Wire expects to see a change in venues for a lot of employment litigation. “I think that even more employment litigation will continue to move to state courts in Colorado and away from Federal courts, as the state laws become more worker friendly and the time between filing and trial in Federal court increases.”
Will said she and her team would be keeping an eye on how the noncompete laws develop on a state and federal level, as well as developments with sick leave and leave of absence laws.
Garth Jensen, member at Sherman & Howard, said that his clients seem to be more impacted on the administrative and regulatory front than by court or legislative changes. “New SEC disclosure initiatives for my public company clients, heightened antitrust enforcement positions for clients in certain industries and general increased regulatory compliance that add to operating costs.”
“Many of my larger corporate clients are concerned with how to successfully operate while navigating through an increasingly complex (and sometime[s] conflicting) regulatory environment. We need to be able to guide clients in this challenging area,” Jensen said.
There’s a separate trend that Williams is seeing in small- to medium-sized companies, governance disputes.
“The disputes are of all kinds and sizes, but the common theme is that the company starts doing great, one party does not work as hard as the others feel they should, and then recrimination starts,” Williams said.
He added that he also sees many issues between businesses related to the use of another company’s intellectual property. “These too vary in substance and amount but are very common.”
In addition to IP claims, Williams is also seeing that M&A is picking up.
“Corporate lawyers should keep their litigators close to help avoid risk, manage risk, prevent litigation, or be prepared to deal with hiccups in the process,” Williams said. “Too often I see deals which could have been salvaged if the litigators had been involved early on.”
Securing Wins for Clients
The Best Lawyers Law Week spoke to also shared a variety of their high points over the past year.
Williams saw preliminary injunction wins for companies in the covenant issues and in governance.
“It is always satisfying when an important client tells you how the guidance you gave and the hard choices you proposed, perhaps years ago, have led to substantial business success,” Jensen said.
Pratt and O’Connell said that while individual case achievements were satisfying, they take tremendous pride in the counseling side of their practice.
“Advising our employment clients on best practices, drafting and fine-tuning employment policies and procedures and collaborating on employee handbooks are incredibly rewarding facets of our work,” Pratt and O’Connell said. “While we zealously defend our clients once suits are filed, averting disputes and resolving any issues that do arise prior to litigation are the ultimate goals.”
Through his work with the legislature, Walker believes he had a positive impact on workplace legislation in Colorado.
Wins for Wire included victories in the past year for whistleblowers, both in the retaliation space and in the bounty and qui tam space.
Labor & Employment and Corporate Best Lawyer Honorees
In total, 15 firms with attorneys honored in the labor and employment and corporate practice areas shared their honorees with Law Week. Other attorneys named Best Lawyers in the labor and employment practice area include:
Raymond Martin, Jesica Goneau Scott, Melissa Romero and Marissa Ronk at Wheeler Trigg O’Donnell; Kris Kostolansky and Tyler Owen at Lewis Roca; Roger Tsai at Faegre Drinker; Brent Johnson at Fairfield & Woods; Dipak Patel at Ciancio Ciancio Brown; Christopher Ottele, Christine Samsel and Kayla Dreyer at Brownstein Hyatt Farber Schreck; Brett Painter at Davis Graham & Stubbs; Chris Leh at Leh Law Group; Raymond Derry and Patrick Miller at Sherman & Howard; Diana Fields at Kutak Rock; and Mark Wiletsky, Michael Beaver, Steven Gutierrez, John Husband, Brian Mumaugh and Maureen Reidy Witt at Holland & Hart.
In the corporate practice area, other attorneys named Best Lawyers include:
Jonathan Schulman at Perkins Coie; Bryan Biesterfield and Peter Moore at Robinson Waters & O’Dorisio; Joel Fry and Karen Witt at Lewis Roca; Mark Weakley, James Leonard, Jeffrey Sherman and Douglas Wright at Faegre Drinker; Adam Agron, Steven Demby, Michael King, Gino Maurelli, Elizabeth Paulsen, Jay Spader, Brendan Leanos and Evan Leitch at Brownstein Hyatt Farber Schreck; Nathan Goergen, Taylor Smith, Brian Boonstra, John Elofson, Kristin Lentz, Matthew Perkins and Bruce Stocks at Davis Graham & Stubbs; G. Brent Coan and Amanda Huston at Coan, Payton & Payne; Karen Chapman, Jeffrey Kesselman, William Peffer, Parker Schenken, Lyle Wallace, Elane Nolen and Jackie Benson at Sherman & Howard; Gil Rosenthal and Lee Sachnoff at Kutak Rock; and Christopher Balch, Amy Bowler, Leslie Boyle, J. William Callison, James Crowe, Michael Dill, Stephanie Edinger, Robert Keatinge, Billi McCullough, Susan Oakes, Rochelle Rabeler, Lucy Stark and Ashley Wald at Holland & Hart.
Editor’s Note: This article was updated Sept. 17 to include more names of attorneys in the list of individuals who were recognized by Best Lawyers in this practice area.