Are employee non-compete agreements enforceable in Michigan?
Michigan lets an employer enforce an employee non-compete that protects its reasonable competitive business interests and is reasonable in duration, geographic area, and the type of employment or line of business restricted . A reasonable covenant protects against the employee's gaining an unfair competitive advantage but may not bar the employee from using general knowledge or skill .
The governing statute is part of the Michigan Antitrust Reform Act. A covenant is valid only if it does more than block ordinary competition — under St. Clair Medical, P.C. v. Borgiel it must protect against the employee gaining an unfair competitive advantage and may not stop the employee from using general knowledge or skill . For a clause-by-clause pass over a specific agreement against these rules, the Michigan non-compete reviewer checklist walks the full covenant suite item by item with each requirement's force level.
A Michigan non-compete is measured against MCL 445.774a, so a covenant that does no more than suppress ordinary competition fails even though the statute permits non-competes: it protects a reasonable competitive business interest only where it guards against the employee gaining an unfair advantage rather than shielding the employer from lawful rivalry. On a touch screen, a tap shows all 2 sources in this group. A covenant whose recited purpose is ordinary competition, or one bolted onto a role that touches no confidential information, customer relationship, or trade secret, has no interest to defend and is exposed on that ground before duration or geography is ever reached.
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MCL 445.774a supports the rule that a Michigan employee non-compete is permitted when it protects a reasonable competitive business interest and is reasonable in duration, geographic area, and type of employment.
An employer may obtain from an employee an agreement or covenant which protects an employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
See MCL § 445.774a(1).
Borgiel supports the rule that a reasonable Michigan covenant must protect against an unfair competitive advantage and may not bar use of general knowledge or skill.
To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
What legitimate business interests can support a Michigan non-compete?
An employer's confidential information can support a Michigan non-compete to the extent the covenant reasonably protects it, but an employee's general knowledge or skill cannot. On a touch screen, a tap shows all 2 sources in this group. Customer relationships and goodwill are also protectable: in St. Clair Medical, P.C. v. Borgiel, the Court of Appeals held that a covenant protecting an employer's interest in retaining patients and the goodwill of its practice protected a reasonable competitive business interest . Michigan's trade-secret definition includes a requirement that the information derive independent economic value from not being generally known or readily ascertainable by proper means .
In Follmer, Rudzewicz & Co., P.C. v. Kosco, the Michigan Supreme Court held that a covenant is enforceable to the extent it reasonably protects the employer's confidential information, and unenforceable to the extent it reaches further . Borgiel draws the same line on the employee side: the covenant cannot bar the use of general knowledge or skill .
The Michigan Uniform Trade Secrets Act supplies the trade-secret overlay. A trade secret is information that derives independent economic value from not being generally known and is the subject of reasonable secrecy efforts .
A Michigan covenant reaches only as far as the confidential information it reasonably protects and no further, so a restraint that sweeps in the general knowledge, skill, and experience the employee acquired on the job is enforceable only to the extent it guards real confidential information. On a touch screen, a tap shows all 2 sources in this group. A confidentiality definition that carves out general skill, and a covenant tied to identified protectable interests rather than to the employee's expertise, keep the restraint on the enforceable side of that line; a covenant that would bar the employee from using ordinary professional ability is unenforceable to that extent.
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Follmer supports protecting an employer's confidential information through a covenant, but only to the extent reasonably necessary.
To the extent such an agreement provides reasonable protection for the confidential information of the employer, it does not violate the statute and is enforceable.
See Follmer, Rudzewicz & Co., P.C. v. Kosco, 420 Mich. 394 (1984).
St. Clair Medical, P.C. v. Borgiel holds that a covenant protecting an employer's interest in retaining patients and its goodwill protects a reasonable competitive business interest, independent of access to patient lists.
We conclude, nevertheless, that the restrictive covenant was protecting plaintiff's competitive business interest in retaining patients, that it provided plaintiff with time to regain goodwill with its patients, and that it prevented defendant from using patient contacts gained during the course of his employment to unfair advantage in competition with plaintiff.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
Borgiel supports the limit that a non-compete cannot prohibit an employee from using general knowledge or skill.
To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
MCL 445.1902 supports Michigan's statutory trade-secret definition, which requires independent economic value from secrecy and reasonable secrecy efforts.
“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following: (i) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
See MCL § 445.1902(d).
How long and how broad can a Michigan non-compete be?
Michigan requires an employee non-compete to be reasonable in its duration, geographic area, and the type of employment or line of business it restricts . Whether a covenant clears that bar is a question of law when the relevant facts are undisputed .
Reasonableness is fact-specific, but the outer bounds are clear: in Mid Michigan Medical Billing Service, Inc. v. Williams, the Court of Appeals held that a restriction with unlimited duration and geographic reach on working for any past or current client was unreasonable . Coates v. Bastian Brothers, Inc. confirms a court decides reasonableness as a matter of law when the underlying facts are not in dispute .
Duration, geography, and covered activity are measured against the specific interest the covenant protects, so a long default term copied from another form is tested against a market it was never sized to. An unlimited or open-ended client restriction is vulnerable as unreasonable, and a narrower, interest-matched scope is the one a court is more likely to leave standing. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
MCL 445.774a supports the requirement that a covenant be reasonable as to duration, geographic area, and type of employment or line of business.
An employer may obtain from an employee an agreement or covenant which protects an employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
See MCL § 445.774a(1).
Coates supports that reasonableness of a Michigan non-compete is a question of law when the relevant facts are undisputed.
The reasonableness of a noncompetition provision is a question of law when the relevant facts are undisputed.
See Coates v. Bastian Bros., Inc., 276 Mich. App. 498 (2007).
Mid Michigan Billing supports treating an unlimited-duration, unlimited-geography client restriction as unreasonable.
Although plaintiff argues that the expansive restriction is necessary to protect its business interests, plaintiff does not have an unlimited right to restrict the business choices of its clients.
See Mid Mich. Med. Billing Serv., Inc. v. Williams, No. 323890 (Mich. Ct. App. Feb. 18, 2016).
Is continued employment enough consideration for a Michigan non-compete?
Continued employment is sufficient consideration for a Michigan non-compete signed by an at-will employee . For employees who could be fired only for just cause, QIS, Inc. v. Industrial Quality Control, Inc. framed the issue as whether refusing to sign the non-compete would be just cause for termination .
The outcome in QIS is the cautionary part. The court agreed the agreement was void because the employees could not be dismissed without just cause, so their continued employment did not supply consideration for signing a new restraint . The at-will rule it recited (drawn from federal authority applying Michigan law) governs only when employment really is at will.
Continued employment alone is sufficient consideration for a Michigan covenant only where the worker is genuinely at will. Where the worker is a just-cause or contract employee, a covenant supported by nothing more than continued employment is void, because refusing to sign would not have been just cause for termination, so a covenant in that setting stands only on separate, identifiable consideration such as a signing or retention bonus, a raise, a promotion, or new confidential access .
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QIS states the rule that mere continuation of at-will employment is sufficient consideration for a Michigan non-compete (while holding the covenant void on its facts because the workers were just-cause employees).
Mere continuation of employment is sufficient consideration to support a noncompete agreement in an at-will employment setting.
See QIS, Inc. v. Indus. Quality Control, Inc., 262 Mich. App. 592 (2004).
QIS held the covenant void for lack of consideration because the workers were just-cause employees, so continued employment did not supply consideration; refusal to sign would not amount to just cause for termination.
Because defendants were “just cause” employees, however, the issue is whether defendants' refusal to sign the noncompete agreement would amount to “just cause” for their termination.
See QIS, Inc. v. Indus. Quality Control, Inc., 262 Mich. App. 592 (2004).
Can a Michigan court rewrite or limit an overbroad non-compete?
A Michigan court may limit an unreasonable non-compete to render it reasonable and then enforce it as limited under MCL 445.774a. On a touch screen, a tap shows all 2 sources in this group.
This power is real but discretionary, not guaranteed. In Mid Michigan Medical Billing Service, Inc. v. Williams, the court confirmed that MCL 445.774a lets a court modify an unreasonable covenant to render it reasonable and enforceable rather than void it outright .
MCL 445.774a lets a court limit an overbroad covenant, but the power is discretionary — the statute says a court may narrow a covenant, not that it must, and a court may decline to save one it views as punitive. On a touch screen, a tap shows all 2 sources in this group. A covenant drawn to the minimum scope, geography, and duration the protectable interest requires does not depend on that discretion, while one that reaches wide on the assumption a judge will trim it is exposed if the judge declines. That same discretion shapes what an employer can safely tell third parties about the covenant: a notice to a prospective employer built on a restraint a court later narrows or refuses to enforce can expose the employer to a tortious-interference claim, so a disclosure keyed to the covenant as it would actually be enforced carries less risk than one keyed to its full drafted breadth .
Sources for this answer
MCL 445.774a supports the rule that a Michigan court may limit an unreasonable covenant and enforce it as limited (statutory blue-pencil).
To the extent any such agreement or covenant is found to be unreasonable in any respect, a court may limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited.
See MCL § 445.774a(1).
Mid Michigan Billing supports that MCL 445.774a lets a court modify an unreasonable covenant to render it reasonable and enforceable rather than void it.
If the terms of a noncompetition agreement are unreasonable, MCL 445.774a allows a court to modify the terms of the agreement to render it reasonable and enforceable in light of the circumstances in which it was made.
See Mid Mich. Med. Billing Serv., Inc. v. Williams, No. 323890 (Mich. Ct. App. Feb. 18, 2016).
Are Michigan business-to-business or sale-of-business non-competes judged differently?
Michigan judges a commercial non-compete between businesses under the antitrust rule of reason rather than the MCL 445.774a employee test, as the Michigan Supreme Court held in Innovation Ventures, LLC v. Liquid Manufacturing, LLC .
The rule of reason flows from the Michigan Antitrust Reform Act, which makes contracts in restraint of trade in a relevant market unlawful and directs courts to give due deference to federal antitrust interpretations. On a touch screen, a tap shows all 2 sources in this group. That standard is different from the employee test: a true commercial or transaction-ancillary restraint is analyzed for its market context and competitive effect rather than under MCL 445.774a's duration, geography, and type-of-employment framework.
An employee restrictive covenant and a covenant ancillary to the sale of a business or between businesses run on different tracks in Michigan: a genuine commercial covenant is judged under the antitrust rule of reason, not the MCL 445.774a duration-geography-and-line-of-business test. On a touch screen, a tap shows all 2 sources in this group. A covenant that mislabels a business-to-business restraint as an employee covenant, or the reverse, is analyzed under the wrong standard, and a restraint sized to satisfy one framework can fail the other; an employee agreement kept clear of transaction-ancillary restraints leaves each covenant measured against the standard it was drafted for.
Sources for this answer
Innovation Ventures supports judging commercial business-to-business non-competes under the antitrust rule of reason rather than the MCL 445.774a employee test.
Commercial noncompete agreements between businesses should be evaluated under the rule of reason, and federal court interpretations of the rule of reason should be given due deference.
See Innovation Ventures, LLC v. Liquid Mfg., LLC, 499 Mich. 491 (2016).
MCL 445.772 supports the antitrust baseline that a contract in restraint of trade in a relevant market is unlawful, which anchors the rule-of-reason analysis for commercial covenants.
A contract, combination, or conspiracy between 2 or more persons in restraint of, or to monopolize, trade or commerce in a relevant market is unlawful.
See MCL § 445.772.
MCL 445.784 supports giving due deference to federal antitrust interpretations, which the rule-of-reason analysis for commercial covenants relies on.
It is the intent of the legislature that in construing all sections of this act, the courts shall give due deference to interpretations given by the federal courts to comparable antitrust statutes, including, without limitation, the doctrine of per se violations and the rule of reason.
See MCL § 445.784(2).
What special non-compete issues affect Michigan physicians?
Michigan does not categorically ban physician non-competes — they are analyzed under the ordinary MCL 445.774a reasonableness test, and Borgiel itself upheld a physician covenant . The distinctive problem is evidentiary, not categorical.
In Isidore Steiner, DPM, PC v. Bonanni, the Court of Appeals held that Michigan's physician-patient privilege is more protective than HIPAA and blocks discovery of nonparty patient information, which can make it harder for a medical employer to prove diversion of patients .
Michigan applies no categorical physician rule: a physician covenant runs through the ordinary MCL 445.774a reasonable-competitive-business-interest test and can satisfy it . The distinctive Michigan problem is proof rather than validity — the physician-patient privilege can block discovery of nonparty patient information, so a covenant that reads well can still be hard to enforce where the employer's diversion case depends on patient records it cannot reach . A radius and term sized to the interest protected, and an enforcement theory resting on non-privileged evidence of diversion, are what carry a physician restraint in practice rather than only on paper.
Sources for this answer
Borgiel supports that a physician non-compete can satisfy the MCL 445.774a reasonable-competitive-business-interest test.
We conclude that the covenant protected plaintiff from unfair competition by defendant and therefore protected a reasonable competitive business interest as required by MCL 445.774a(1).
See St. Clair Med., P.C. v. Borgiel, 270 Mich. App. 260 (2006).
Steiner supports that Michigan's physician-patient privilege blocks discovery of nonparty patient information, creating a proof hurdle in physician non-compete enforcement.
Because Michigan law is more protective of patients' privacy interests in the context of this litigation, Michigan law applies to plaintiff's attempted discovery of defendant's patient information.
See Isidore Steiner, DPM, PC v. Bonanni, 292 Mich. App. 265 (2011).
How does Michigan's trade-secret act interact with non-competes?
The Michigan Uniform Trade Secrets Act runs alongside a non-compete: it displaces conflicting common-law tort remedies for misappropriation but preserves contract remedies, so a confidentiality and trade-secret strategy can backstop or substitute for a covenant .
MUTSA has its own timing and fee rules that a non-compete does not. A misappropriation claim must be brought within three years of discovery , and a court may award attorney fees for bad-faith claims or willful and malicious misappropriation — relief the non-compete statute itself does not provide .
Confidentiality and trade-secret protection run independent of any covenant and outlast it: a trade-secret obligation holds for as long as the information keeps the secrecy that makes it a trade secret, and the Michigan Uniform Trade Secrets Act supplies remedies for misappropriation whether or not a non-compete survives . Return, deletion, and certification mechanics matter here because they are part of the reasonable secrecy efforts a trade secret requires, so a program that fails to reclaim confidential material can forfeit trade-secret status altogether. Fee exposure runs both ways: the non-compete statute carries no fee award, while the trade-secret act lets a court award fees to the prevailing party for a bad-faith misappropriation claim or willful and malicious misappropriation, so an aggressive or unfounded misappropriation theory carries its own downside .
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MCL 445.1908 supports that MUTSA displaces conflicting common-law tort remedies for trade-secret misappropriation while preserving contract remedies.
Except as provided in subsection (2), this act displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret.
See MCL § 445.1908(1).
MCL 445.1907 supports MUTSA's three-year limitations period for a misappropriation claim, distinct from a contract breach claim.
An action for misappropriation must be brought within 3 years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.
See MCL § 445.1907.
MCL 445.1905 supports fee-shifting for bad-faith misappropriation claims or willful and malicious misappropriation, relief the non-compete statute does not provide.
If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney's fees to the prevailing party.
See MCL § 445.1905.
Will Michigan enforce a non-compete's choice-of-law or forum-selection clause?
A Michigan court may enforce a non-compete's Michigan forum-selection clause, as the Sixth Circuit held for the clause in Stryker Corp. v. Ridgeway . In Barshaw v. Allegheny Performance Plastics, LLC, the Court of Appeals held that, absent factors it found not germane to that appeal, a forum-selection clause may be considered separately from the contract's choice-of-law provision, and the Michigan court applies Michigan law to decide its effect .
But the clause type matters. In Barshaw v. Allegheny Performance Plastics, LLC, the Court of Appeals held that a Michigan court applies Michigan law to decide the effect of a forum-selection clause, even when the contract chooses another state's law for the merits .
“Under Michigan law, the Michigan forum-selection clause is valid and enforceable.”
Sources for this answer
Stryker/Stone Surgical supports that a non-compete's Michigan forum-selection clause is valid and enforceable under Michigan law.
Under Michigan law, the Michigan forum-selection clause is valid and enforceable.
See Stryker Corp. v. Ridgeway, 858 F.3d 383 (6th Cir. 2017).
Barshaw supports that a Michigan court applies Michigan law to determine the effect of a forum-selection clause, separate from any choice-of-law provision.
Hence, in the absence of certain factors not germane to this appeal, a forum-selection clause may be considered separately from any choice-of-law provision that may also be in the contract, and in such cases, the Michigan court in which the action has been filed, shall apply Michigan law in determining the effect of the forum-selection clause.
See Barshaw v. Allegheny Performance Plastics, LLC, 334 Mich. App. 741 (2020).
Does a Michigan non-compete toll or extend during breach or litigation?
This is an open Michigan question. No Michigan statute or appellate decision surfaced here squarely endorses automatic judicial tolling, or enforcement of an extension-on-breach clause after the stated restricted period expires. On a touch screen, a tap shows all 2 sources in this group.
The relevant backdrop cuts against assuming an automatic extension. MCL 445.774a authorizes a court to limit an unreasonable covenant, not to expand one , and any extension still has to satisfy the reasonableness test that Coates applies as a question of law . A clause that converts a fixed restraint into an open-ended one as litigation drags on raises exactly the reasonableness concern the statute targets.
Whether a Michigan court will extend a covenant past its stated end date for a period of breach is unsettled, and the statutory text cuts against assuming it will: MCL 445.774a authorizes a court to limit an unreasonable covenant, not to expand one, and any extension is itself a restraint that must clear the same reasonableness test. On a touch screen, a tap shows all 2 sources in this group. An extension-on-breach clause written as an open-ended toll that lengthens as litigation drags on invites the very unreasonableness the statute targets, while one bounded to the duration of the breach and tied to a legitimate interest stays inside the framework a court would apply as a question of law when the facts are undisputed.
Sources for this answer
MCL 445.774a provides backdrop support for the tolling caution: its remedial text authorizes a court to limit an unreasonable covenant, not to extend one, so it does not endorse automatic extension.
To the extent any such agreement or covenant is found to be unreasonable in any respect, a court may limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited.
See MCL § 445.774a(1).
Coates provides backdrop support for the tolling caution: any clause that would extend the restricted period must still satisfy Michigan's reasonableness framework, which Coates treats as a question of law when facts are undisputed.
The reasonableness of a noncompetition provision is a question of law when the relevant facts are undisputed.
See Coates v. Bastian Bros., Inc., 276 Mich. App. 498 (2007).
What Michigan non-compete reform should employers watch?
As of the September 26, 2026 review, the Michigan Legislature's bill record shows House Bill 4040 (2025), which would amend MCL 445.774a to bar nearly all worker non-competes, was referred to the House Committee on Economic Competitiveness on January 30, 2025 . The only later entry in that record, dated February 4, 2025, notes that the bill was electronically reproduced , so as of that review the governing standard is statutory reasonableness under MCL 445.774a .
HB 4040 would prohibit a business from entering into, obtaining, or enforcing a non-compete against a worker, reaching beyond employees to independent contractors, interns, and volunteers . Unless and until it is enacted, the governing standard is statutory reasonableness under MCL 445.774a, as interpreted by Michigan non-compete cases.
A separate 2025 development affects onboarding paperwork that bundles covenants. In Rayford v. American House Roseville I, LLC, the Michigan Supreme Court held that a contractually shortened limitations provision in an adhesion agreement must be examined for reasonableness .
A form or worker notice that treats HB 4040's ban as Michigan law misstates the governing test: unless the bill is enacted, a Michigan non-compete is measured by the reasonableness standard in MCL 445.774a, and an overstated notice can mislead workers about covenants that may still be enforceable .
Sources for this answer
HB 4040, a 2025 reform bill, would prohibit a business from entering into, obtaining, or enforcing a non-compete against a worker.
Except as otherwise provided in subsection (2), a business shall not do any of the following: (a) Enter into or attempt to enter into a noncompete agreement with a worker. (b) Obtain or attempt to obtain a noncompete agreement from a worker. (c) Enforce or attempt to enforce a noncompete agreement against a worker or former worker.
See 2025 Mich. H.B. 4040 (introduced Jan. 30, 2025).
The official Michigan Legislature bill history for HB 4040 lists its introduction, first reading, and referral to the House Committee on Economic Competitiveness on January 30, 2025, followed by a February 4, 2025 entry noting that the bill was electronically reproduced.
History (House actions in lowercase, Senate actions in UPPERCASE) Note: A page number of 0 indicates that the page number is coming soon Date Journal Action 1/30/2025 HJ 10 Pg. 85 introduced by Representative Rep. Denise Mentzer 1/30/2025 HJ 10 Pg. 85 read a first time 1/30/2025 HJ 10 Pg. 85 referred to Committee on Economic Competitiveness 2/04/2025 HJ 11 Pg. 89 bill electronically reproduced 01/30/2025
See 2025 Mich. H.B. 4040, Bill Status (Mich. Legislature).
MCL 445.774a permits an employer to obtain a non-compete that protects reasonable competitive business interests if it is reasonable as to duration, geographic area, and type of employment or line of business.
An employer may obtain from an employee an agreement or covenant which protects an employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.
See MCL § 445.774a(1).
Rayford supports that a contractually shortened limitations provision in an adhesion agreement must be examined for reasonableness, which matters for onboarding packets bundling covenants.
A shortened limitations provision contained in such an agreement must be examined for reasonableness.
See Rayford v. American House Roseville I, LLC, ___ Mich. ___ (2025) (Docket No. 163989).
How does Michigan treat employee (anti-raiding) non-solicits?
Michigan's non-compete statute, MCL 445.774a, may not govern an employee non-solicitation covenant, because in Total Quality, Inc. v. Fewless the Court of Appeals noted that the defendants had cited no authority subjecting nonsolicitation agreements to it .
In Total Quality, Inc. v. Fewless, the nonsolicitation agreement barred a departing employee from soliciting the employer's customers and business relationships and from inducing or hiring its employees. The Court of Appeals held that such a nonsolicitation agreement is not governed by MCL 445.774a — the statute the rest of this guide applies to employee non-competes — because the defendants pointed to no authority subjecting a nonsolicitation agreement to it, leaving the covenant to common-law reasonableness .
Because the statute does not govern, a Michigan employee non-solicit stands or falls on common-law reasonableness — a reasonable competitive business interest plus reasonable duration and scope. Aim it at a real competitive business interest, not at barring ordinary competition .
Sources for this answer
The Michigan Court of Appeals held that a nonsolicitation agreement — there covering the employer's customers, business relationships, and employees — is not governed by MCL 445.774a(1) and is instead analyzed under common-law reasonableness.
The provision at issue in this case is a nonsolicitation agreement, and defendants have not cited authority in support of the contention that nonsolicitation agreements are subject to MCL 445.774a(1).
See Total Quality, Inc. v. Fewless, 332 Mich. App. 681, 958 N.W.2d 294 (2020).
What does federal law require a non-compete or confidentiality agreement in Michigan to say about whistleblowers and pay?
An employee confidentiality, non-compete, or invention assignment agreement signed or updated now that governs trade secrets or other confidential information must give the Defend Trade Secrets Act whistleblower-immunity notice, and for employees the National Labor Relations Act covers, Section 7 of that Act protects concerted activity, including joining together over pay and working conditions, that a broad confidentiality clause can restrict. The employer may satisfy the notice duty by cross-referencing a qualifying policy document provided to the employee, but an employer that omits the notice may not be awarded exemplary damages or attorney fees under the Defend Trade Secrets Act in an action against an employee who was not given notice.
The notice describes a federal immunity: an individual cannot be held liable under federal or state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. For an agreement signed or updated now, the duty to give that notice reaches any agreement with an employee that governs trade secrets or other confidential information, whatever else the agreement does.
Section 7 gives employees the National Labor Relations Act covers a statutory right to engage in concerted activity for mutual aid or protection, including joining together to improve pay and working conditions. For employees the Act covers, the Board's work-rule standard adopted in 2023 makes a rule presumptively unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights; an employer can rebut that presumption only by showing a legitimate and substantial business interest it cannot serve with a more narrowly tailored rule. The 2023 standard may change, but the Section 7 right it enforces is statutory. State law may add its own requirements for the same clauses.
A form carried over without the immunity notice, or a cross-reference to a reporting policy the employee never received, leaves the confidentiality clause without a valid notice, so the Act's exemplary damages and attorney fees are unavailable against that employee. A Confidential Information definition that sweeps in pay and working conditions with no carve-out exposes the employer to an unfair-labor-practice finding for employees the Act covers.
Sources for this answer
An individual is immune from criminal and civil liability under federal and state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal.
An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that— (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
See 18 U.S.C. § 1833(b)(1).
An employer must give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A).
An employer complies with the notice requirement by cross-referencing a policy document, provided to the employee, that sets out the employer's reporting policy for a suspected violation of law.
An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.
See 18 U.S.C. § 1833(b)(3)(B).
An employer that does not give the required notice may not be awarded exemplary damages or attorney fees in a trade-secret action against an employee who did not receive it.
If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.
See 18 U.S.C. § 1833(b)(3)(C).
Section 7 gives employees the right to engage in concerted activities for mutual aid or protection, the statutory basis for keeping discussion of pay and working conditions outside confidentiality restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.
See 29 U.S.C. § 157 (NLRA § 7).
The National Labor Relations Board protects the right of private-sector employees, with or without a union, to join together to improve wages, benefits, and working conditions.
Established in 1935, the National Labor Relations Board is an independent federal agency that protects employees from unfair labor practices and protects the right of private sector employees to join together, with or without a union, to improve wages, benefits and working conditions.
See NLRB Office of Public Affairs, news release of Feb. 21, 2023 (agency mission statement).
Under the work-rule standard the Board adopted in 2023, a rule with a reasonable tendency to chill employees from exercising their Section 7 rights is presumptively unlawful unless the employer proves a legitimate and substantial business interest it cannot advance with a more narrowly tailored rule.
Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.
See Stericycle, Inc., 372 NLRB No. 113 (2023); NLRB Office of Public Affairs, Board Adopts New Standard for Assessing Lawfulness of Work Rules (Aug. 2, 2023).