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Hawaiian Airlines Employee Agreement “Assignment”
in Selected Topics in Business Law
November 7, 2023
Background:
As you know, a noncompete in the employment context (a stand-alone agreement or provisions in an employment contract) imposes restrictions on an employee’s ability to work for a competing employer (or start a competing business or
develop competing products or services) after their employment has ended. States still have their own legislation and common law governing non-competes, despite the fast developing movement by
the Federal Trade Commission (FTC) to ban noncompetes generally, which you read a bit about. Only a few states have a complete ban (California, most famously), but many like Hawaii (or in Connecticut
, and other states
such as Oregon
) non-competes are permitted, but restricted in some ways and generally the courts use a long-standing common law approach to determining enforceability. That is, traditionally in most states a non-compete is enforceable if it (1) protects a legitimate business interest of the employer (e.g., trade secrets and other confidential information, customer and client relationships) and (2) reasonable in terms of length of time, geographic scope, and 3. Not against the public interest.
Recall that to prepare for this session you read up on some corporate governance materials from Hawaiian Airlines, You also were asked to read a bit about noncompetes and the FTC’s proposed rule, and to review Hawaii’s unique approach to noncompetes (
Hawaii Act 158
)
enacted in 2015. Scenario:
After graduation you achieved your dream job as an in-house attorney at Hawaiian Airlines (HA). Your family is very proud. You and your team are assistant general counsels and report to Aaron Alter, Hawaiian Airlines’ Executive Vice President, Chief Legal Officer & Corporate Secretary. This afternoon just as you were all about to pack up to leave the office engage in some pau hana activities, Alter calls you into his office. He asks you to advise him, and eventually the other executives like CEO Peter Ingram, and the board of directors, about a few items. In particular, he is curious about the implications of some legal rules related to employee noncompete agreements – and potential policy changes – that might impact HA’s ability to attract and retain the best talent to enable its business success.
Keep in mind, you must provide legal and
business advice, including concrete recommendations with support, about what Hawaiian Airlines should do when faced with the following issues. For now, this is all internal and privileged advice, so just be direct and candid in you recommendations and justifications.
You are asked to provide your legal and business insight on the following questions and have it ready by tomorrow morning:
1.
Assuming noncompetes are useful, how should HA use non-competes for employees based in Hawaii? Should they be applied to all employees, or only specific types of workers? 2.
As a matter of policy, law, and business ethics, Alter asks you to advise on whether HA should be using noncompetes at all (and to explain why or why not).
3.
a. Since noncompete are under discussion around the country, Alter asks you to draft a brief policy outline
on the following question: As a matter of law and policy, should non-competes be banned? [In your response and explanation, please consider the statements on the Federal Trade Commission’s proposed rule by FTC Chair Khan and Commissioner Wilson in the assigned readings.]
b. Based on your answer to the previous question (3.a.), prepare some “talking points” for HA in response – be it in support or opposition – to the Federal Trade Commission’s Notice of Proposed Rulemaking on non-compete clauses. [Be prepared for members of your team to deliver a short presentation based on your talking points]. 4.
Bonus question if there is time
: what are some methods, techniques, and strategies for how HA and its leadership can advocate with policy makers for the position you recommend?
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