Employers Score Win in Non-Compete Case: Permobil’s Victory

Non-compete law has spent the last few years acting like a toddler after too much birthday cake: loud, messy, and impossible to ignore. Federal regulators tried to slam the brakes on non-compete clauses. State legislatures kept tightening the rules. Labor officials questioned whether these agreements chill worker rights. And courts? Courts did what courts do best: they complicated the storyline just enough to keep employment lawyers fully caffeinated.

That is exactly why the Permobil dispute matters. The case did not hand employers a universal permission slip to slap non-competes into every offer letter like a free ketchup packet. But it did deliver something almost as important: a concrete, high-profile example of an employer winning on the core non-compete issue even while losing on other contract language in the same agreement.

In plain English, Permobil scored a meaningful victory, but not a total one. That nuance is the whole story. The employer-friendly takeaway is real. The caution label is also real. For businesses, HR teams, in-house counsel, and anyone who has ever seen the phrase “restrictive covenant” and immediately needed coffee, the Permobil fight is one of the clearest road maps yet for what may still work in a post-FTC-ban, heavily litigated, state-law-driven world.

What Happened in the Permobil Case?

Permobil, a mobility-device manufacturer with U.S. operations tied to Tennessee, sued former employee Mark Westphal after he left the company and went to work for Sunrise Medical, a competitor in the wheelchair market. Westphal had worked on a confidential initiative known as Project Greenfield, a secret effort involving a new product line. After he left, Permobil alleged that his move to a competitor violated restrictive covenants in his employment agreement and threatened its trade secrets and confidential business information.

The agreement contained several restrictions, including a one-year non-compete covering the United States, a ban on soliciting customers, a restriction on hiring away employees, confidentiality language, and a non-disparagement clause. That contract was not just another dusty HR form pulled from a drawer labeled “Important Stuff We Hope Never Gets Litigated.” Permobil argued it was narrowly tied to a sensitive project and to legitimate business interests.

Westphal fought back on multiple fronts. He challenged venue in Tennessee, argued Washington law should matter because he was based there, opposed injunctive relief, and filed an unfair labor practice charge with the National Labor Relations Board. That charge triggered a second legal theater: not only was there a federal court case, but also an NLRB case testing whether the agreement unlawfully interfered with rights under Section 7 of the National Labor Relations Act.

Why Employers Saw the Ruling as a Win

The biggest employer victory came in the administrative law judge’s December 2024 decision. The ALJ did not accept the broad theory that Permobil’s non-compete itself violated federal labor law. The judge dismissed allegations that the noncompetition provision and the employee non-solicitation provision were unlawful under the NLRA. That was a significant moment because the NLRB General Counsel had been advancing an aggressive view that many non-competes unlawfully chill employee mobility and protected concerted activity.

In other words, the judge did not treat “employee movement” as a magic phrase that automatically turns every non-compete into a labor-law violation. Instead, the decision looked closely at context. Permobil’s project was described as secret. The restriction was tied to employees working on that project. The employer offered a concrete business justification. And the judge concluded that the General Counsel had not shown the clause could have been drafted more narrowly while still protecting those interests.

That matters because employers need facts, not vibes. The Permobil ruling suggests that a non-compete is more defensible when it is linked to a truly sensitive role, tied to real confidential initiatives, and aimed at protecting a defined competitive concern rather than just discouraging employees from leaving because turnover is annoying.

There was another reason the case stood out. A Tennessee federal judge also refused to toss the lawsuit early. Westphal argued that Washington’s non-compete law should block the Tennessee forum selection clause and undermine the agreement. The court was not persuaded at that stage. It held that Tennessee law governed under the contract and allowed the case to stay in Tennessee. For employers, that reinforced a second lesson: thoughtful drafting around governing law and venue can matter a lot when a dispute begins.

Why This Was Not a Total Employer Sweep

Now for the part that keeps this story from becoming a victory-lap montage set to dramatic music.

The ALJ did find problems with other parts of Permobil’s agreement. Specifically, the judge concluded that provisions barring employees from disclosing the terms of the agreement and from disparaging or criticizing the company could violate the NLRA when they interfered with protected activity. That means the employer won on the non-compete and employee-poaching issues, but lost on broader speech-related provisions.

That distinction is critical. Employers reading the case as “Permobil won, therefore all restrictive covenants are safe” are reading the legal equivalent of the menu instead of the meal. The ruling was not a broad endorsement of every employer control mechanism imaginable. It was a narrower message: carefully justified competition restraints may survive, but broad confidentiality and non-disparagement language can still create serious labor-law risk.

And the story did not end there. In 2026, the Board denied Permobil’s effort to remand the case for processing of a private settlement. Why? Because the proposed settlement may have resolved the dispute with Westphal, but it did not meaningfully address the rights of other employees who had signed the same agreement. That Board order is a reminder that even when an employer gets leverage in one part of the fight, public-law issues can remain alive if broader workforce rights are implicated.

The Federal Court Piece Added Even More Nuance

The Tennessee litigation created another wrinkle that business leaders should notice. Permobil asked for a preliminary injunction to stop Westphal from working for Sunrise, using or disclosing confidential information, and soliciting customers. The court denied that request in August 2024, pointing to factual disputes and, importantly, Permobil’s concession that it did not yet have evidence that Westphal had actually disclosed trade secrets to Sunrise.

That is a useful reality check. Even when an employer has a colorable contract claim and a reasonably tailored non-compete, emergency relief is still hard to get. Judges are reluctant to issue extraordinary remedies when evidence is incomplete, facts are hotly disputed, or the employer cannot show immediate irreparable harm with enough specificity.

So yes, Permobil won an important legal argument. But the company did not get every remedy it wanted, every finding it sought, or every shortcut it might have hoped for. For employers, that is probably the most realistic takeaway of all: winning the theory does not automatically mean winning the battlefield.

What the Permobil Case Means in the Bigger 2026 Non-Compete Landscape

Permobil landed in the middle of a broader national shift. The FTC’s 2024 rule attempting to ban most non-competes never took effect and is not enforceable. The agency later abandoned its appeal, which means there is no nationwide federal rule wiping out non-competes across the board. At the same time, the FTC has signaled it still intends to challenge overbroad restrictions case by case. Translation: the giant federal bulldozer stalled, but the agency still has smaller tools and seems perfectly willing to use them.

Meanwhile, the labor-law pressure that had built under prior NLRB General Counsel memoranda also changed. In February 2025, the acting General Counsel rescinded the earlier memo that had taken a more sweeping anti-non-compete position. That does not mean restrictive covenants are suddenly beloved by federal labor officials. It does mean the most aggressive prosecutorial guidance lost some force.

So where does that leave employers? Squarely in state-law country, with a side of federal scrutiny. Washington remains a good example. Its non-compete statute still imposes salary thresholds and restricts out-of-state adjudication for Washington-based workers. In 2026, the employee income threshold is high enough that many ordinary workers remain outside enforceable non-compete coverage. Employers operating across multiple states therefore cannot treat one employer-friendly ruling as a national strategy memo.

That is what makes Permobil so interesting. It shows that non-competes are not dead. It also shows that they are not exactly strolling through the park, eating cotton candy, and enjoying excellent health. They survive when they are disciplined, role-specific, and tied to real business risks. They collapse faster when they are broad, lazy, or drafted as if every departing employee is secretly planning a corporate heist.

Practical Lessons for Employers

1. Tailoring beats boilerplate.

Permobil’s strongest point was not that non-competes are inherently wonderful. It was that the company tied the restraint to a confidential initiative and to employees working on that initiative. Employers should read that as a warning against generic one-size-fits-all clauses.

2. Legitimate business interests still matter.

Courts and labor tribunals are more likely to take an employer seriously when the company can point to trade secrets, confidential strategy, pricing, product development, or customer relationships that are genuinely vulnerable.

3. Keep speech restrictions on a short leash.

Non-disparagement and confidentiality clauses that sweep too broadly can become the legal equivalent of stepping on a rake. Even when the non-compete survives, those other clauses may trigger separate problems.

4. Venue and governing-law clauses are not decorative.

The Tennessee forum selection and choice-of-law provisions mattered. Employers doing multistate business should review those provisions now, not after someone has already resigned and changed their LinkedIn headline to “Thrilled for what’s next.”

5. Evidence still rules the day.

Emergency relief depends on proof. If a company wants an injunction, it needs more than suspicion and a dramatic tone. It needs facts.

What Employees and Their Counsel Should Take From It

The Permobil case is not just a management story. It also shows that employees can create pressure by challenging broad provisions under labor law and state law, even when the employer has a decent argument on the core competitive restriction. Westphal did not erase the non-compete at the ALJ level, but he did help expose vulnerabilities in the broader agreement and keep the fight alive.

For employees, the lesson is simple: do not assume a restrictive covenant is automatically enforceable just because it looks official and includes enough capital letters to frighten a small village. State law matters. Role-specific facts matter. Public policy matters. And clauses that silence criticism, block discussion of workplace issues, or overreach beyond legitimate business concerns may be vulnerable.

Bottom Line: Why Permobil’s Victory Matters

Permobil’s victory matters because it broke through a simplistic narrative. For a while, public debate around non-competes sounded like a shouting match between “ban them all” and “hands off my contract.” The Permobil dispute showed something more realistic. A carefully framed employer restriction can still survive scrutiny. But broader contract language can still fail, regulators can still keep pressure on, and state law can still reshape the practical outcome.

That makes this case less like a coronation and more like a field manual. Employers got a win, yes. But it was a disciplined, fact-specific, partial win. The companies most likely to benefit from Permobil are the ones willing to narrow their covenants, document their business justifications, clean up their ancillary clauses, and prepare actual evidence before asking for judicial muscle.

Everyone else should probably put down the template agreement, step away from the copy-and-paste button, and rethink their strategy.

Additional Experience-Based Insights: What the Permobil Fight Teaches in Real Life

In real-world non-compete disputes, the most revealing part is usually not the headline ruling but the lived experience behind it. Cases like Permobil show how these fights unfold for actual businesses and actual people, and the pattern is remarkably consistent. Employers often believe the key issue is principle: protect the business, guard the secrets, send a signal. Employees often experience the same dispute in much more practical terms: Can I keep my job? Can I afford the legal bills? Can I work in the field I know best without feeling like every Zoom call may become Exhibit A?

For management teams, one experience repeats again and again: a non-compete only feels strong if the surrounding facts are strong. When companies have a well-documented confidential project, limited access to sensitive information, and a role tied closely to strategy, pricing, or product rollout, the restriction looks purposeful. When the company cannot explain why this employee needed this restraint, things get much shakier. Courts and agencies have become increasingly suspicious of restrictive covenants that look mass-produced rather than risk-based.

HR professionals also learn quickly that the pain rarely comes from the headline clause alone. It often comes from the extra language bolted onto the contract over time: non-disparagement terms that sound too absolute, confidentiality provisions broad enough to swallow ordinary workplace discussion, enforcement provisions written with maximum aggression and minimum precision. Those add-ons may feel protective in the abstract, but in litigation they can turn a defensible agreement into a messy one.

From the employee side, the experience is often deeply personal. Even when the employer does not immediately win an injunction, the pressure of litigation can be enormous. Career plans get delayed. New employers get nervous. Families feel the stress. That reality helps explain why regulators remain interested in these agreements even after the FTC’s broader rule collapsed. A covenant can shape behavior long before a judge fully interprets it. Sometimes the restriction works because it is airtight. Other times it works because people are too exhausted, too cautious, or too financially vulnerable to challenge it.

The Permobil story also illustrates a practical truth for lawyers on both sides: settlement does not always end the policy fight. Private resolution can calm a dispute between named parties, but labor agencies may still focus on what the agreement means for the wider workforce. That is especially true when the disputed terms were used with multiple employees.

Ultimately, the strongest experience-based lesson is this: the future of non-compete enforcement belongs to specificity. Specific roles. Specific risks. Specific evidence. Specific drafting. Broad fear-based contracting is aging badly. Precision is aging much better.