Written by Manny Schoenhuber
Welcome back to the third edition of USA Business Digest – Legal newsletter for European companies and investors in the United States. This month, we’ll take a closer look at (1) an executive order signed by President Biden to implement the EU-US data privacy framework and (2) potential implications that federal non-compete law could have on your business. As always, this update is available in both English and German.
DATA PRIVACY ACT
President Biden signs executive order to improve safeguards for United States intelligence activities
On October 7, President Biden signed an executive order to enhance safeguards for United States intelligence activities, directing the steps the US will take to meet its commitments under the EU-US Data Privacy Framework (EU-US DPF). which President Biden and European Commission President von der Leyen announced in March 2022.
Businesses like yours, in both the US and Europe, rely on cross-border data flows to participate in the digital economy and expand economic opportunity. The overall objective of the EU-US DPF is to restore trust and stability to transatlantic data flows after the Court of Justice of the European Union struck down the previous EU-US Privacy Shield framework.
The executive order:
- Adds additional safeguards to U.S. intelligence activities so that those activities pursue specified national security objectives, respect the privacy and civil liberties of all individuals, and advance established intelligence priorities in a manner commensurate with those priorities;
- Authorizes personal information processing requirements and expands the responsibilities of officials to ensure proper remediation of the discrepancy;
- Requires elements of the US intelligence community to update policies and procedures;
- Establishes a multi-layered mechanism for individuals from eligible states and regional economic integration organizations to obtain an independent and binding review and remedy of claims that personal information collected through U.S. intelligence was collected or processed by the U.S. in violation of applicable law ; and
- Calls on the Privacy and Civil Liberties Oversight Board to review the Intelligence Community’s policies and procedures to ensure they are consistent with the Executive Order and to conduct an annual review of the redress process.
This new framework will not only provide the European Commission with a basis for adopting a new adequacy definition, but will also provide greater legal certainty for businesses like yours to safely and securely transfer personal data from the EU to the US
LABOR LAW: NON-COMPETE
Proposed Workers’ Rights Restoration Act to create a federal regime to protect companies’ trade secrets while allowing workers to change jobs more easily
The Workers’ Rights Restoration Act is a bill introduced to create federal legislation regarding non-compete agreements with the stated purpose of bringing uniformity and certainty to an area of employment law that currently still varies from state to state. For example, California already prohibits almost all non-competes, Oklahoma and North Dakota strictly limit them to a very narrow set of circumstances, and Texas now requires valid consideration combined with reasonable limitations on time, geographic scope, and covered activities.
If passed, the bill would ban non-competes for all non-exempt workers nationwide by establishing statutory minimum earnings that must be met before employees can be subject to restrictive covenants after leaving. It should be noted that the bill, as currently drafted, is retroactive to hourly workers, meaning it will invalidate restrictive covenants entered into before the effective date of the law and with the full consent of the parties. While the focus is clearly on employee mobility, the bill also seeks to protect companies’ trade secrets and other assets.
Especially if you are a business with operations in multiple states, a single federal non-compete framework would provide more clarity and uniformity to your employment agreements. But it would likely make it easier for hourly workers to pursue new opportunities without having to abide by more restrictive covenants. Of course, there is no guarantee that the bill will become law in its current form, or that it will pass at all, but you may want to take a proactive approach before a federal ban or non-compete restriction is enacted. One thing is certain, however: it is safe to say that restrictive agreements affecting employee mobility will continue to be tightly controlled. ♦
These materials are provided by Jackson Walker for informational purposes only, do not constitute legal advice, and are not a substitute for legal advice from a qualified advisor. The laws of other countries and nations may be completely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Jackson Walker. The facts and results of each case will vary and no particular outcome can be guaranteed.
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