Articles Posted in Trade Secrets and Restrictive Covenants

RadioShack-ctr-119.jpgBack when the Lamborghini Countach poster was in your bedroom, spinach and artichoke dip was on the menu, and it was hip to be square, this image would have been fitting for this blog — what’s a blog?!?! — post.

Yes, there was a time when a secret recording in the workplace implied an expectation of privacy in whatever conversation was recorded. But, now, everyone has a smartphone and, with a few quick thumb taps, an easy way to audio or video record anything and everything.

So, who among us has a reasonable expectation of privacy at work?

According to the National Labor Relations Board, practically no one who works for the company.

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Trade Secret
Yesterday, I had the privilege of presenting a webinar for LexisNexis with my colleague, Larry Holmes, and Sterling Miller. Larry and I have served in the restrictive-covenant trenches together many times. Sterling serves as Senior Counsel at Gober Hilgers. He’s also the former General Counsel and Chief Compliance Officer to Sabre Corporation and former General Counsel to Travelocity.com. And without any prodding from me, Sterling admitted to reading this blog. Clearly, he’s good people.

Anyway, about that webinar. The three of us riffed for an hour and twenty on the ins and outs of non-competition and non-solicitation agreements. Plus, we offered some drafting tips and discussed ways to protect confidential information. And, of course, I couldn’t resist intersecting those topics with social media. Secret sauce, anyone? At the end, we took 15 minutes of questions from folks like you.

If you’d like to get a copy of the webinar, I’m pretty sure that I can hook you up. (Don’t let me down, Lexis!) Drop me a line and I’ll do my best to take care of you.

And before I leave you for today *** burp *** — I’m all class, folks. For those of you in the Lehigh Valley, if you’re going to attend the SHRM Lehigh Valley October Conference next week, we need to connect IRL. With a few of my friends from the EEOC, my presentation will walk you step-by-step through the process of how to address an EEOC Charge of Discrimination.

Oh, who are we kidding?!? None of my readers have ever had to experience that, amirite? But, just in case you’re, err, asking for a friend, let me know, so you can shower me with praise and dollars, but, mostly dollars I can look out for you.

Image Credit: Benjamin Chun on Flickr.

Your company has set up a private LinkedIn Group. Your company, which controls who may become a member of the Group, has seen the number of Group members swell to nearly 700. Way to go! Because it’s a private group, the names of all of the group members are not generally available to the public.

Now, let’s say that the employee whom you have appointed to manage the LinkedIn Group — the one who knows all the passwords — up and leaves. And, of course, he doesn’t return the passwords. What can you do?

How about a lawsuit for misappropriation of trade secrets? Continue reading

Last week it was #thedress. Before that, Kim Kardashian broke the internet.  But, first, there was the Jimmy John’s non-competition agreement kerfuffle that dominated my Twitter. Probably not yours though, because you have a life. Then again, here you are reading this post, pot.

Or shall I call you kettle?

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I meant to write about this a week or so ago after I saw Dan Packel’s article at Law360. But, then, I got sidetracked with a bunch of NLRB stuff. Until, yesterday, Lizzy McLellan’s article at The Legal Intelligencer brought me back.

So, here’s the deal. The basic rule in PA has always been that, for a non-compete to be enforceable, it needs to be entered into when employment begins (i.e., as consideration for offering employment), or there needs to be some independent consideration to support it (e.g., a raise, bonus, promotion, etc.).

However, some outlier judicial decisions in PA have concluded that PA’s Uniform Written Obligations Act magically adds consideration to any agreement with the words “intending to be legally bound.”

But, back in May, the PA Superior Court disagreed and held that where the employer provided the employee with no benefit or change in job status when the employee signed the non-compete, even if the agreement states that the parties “intend to be legally bound” by its terms, a restrictive covenant is not enforceable.

Now, the Supreme Court will determine whether those five little words are, indeed, magic.

Obviously, if the Supreme Court sides with the company, it will create the proverbial game changer, by allowing companies to require employees to enter into restrictive covenants in exchange for zero consideration.

We’ll see what happens.

If you’re on LinkedIn, consider joining the discussion of news, trends and insights in employment law, HR, and the workplace, by becoming a member of The Employer Handbook LinkedIn Group. Tell ’em Meyer sent you.

My Facebook and Twitter feeds were blowing up yesterday with links to articles at NYTimes.com, Huffington Post, and Jezebel about how the sandwich chain, Jimmy John’s, supposedly makes its sandwich makers and delivery drivers sign these non-competition agreements. These agreements purport to preclude employees from working for certain nearby competitors for two years after their employment with Jimmy John’s ends.

Now, I know what you’re thinking…

That Meyer has the coolest Facebook and Twitter feeds evah! How can I get with him? (Well, here’s how you can get with me next month, but I digress).

I’m not going to comment specifically on Jimmy John’s and its purported practice other than to say that I work in Philadelphia and it would be sacrilege to let a “sub sandwich” pass between these lips. But, after the jump, I do have a few general pointers from employers about restrictive covenants…

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In Pennsylvania, a company and an employee can enter into an agreement whereby, in exchange for some form of consideration, the employee agrees not to compete with the company after the employment ends.

Consideration can come in a variety of forms; for example, a raise, bonus, promotion, or sugar. Initial employment can also be sufficient consideration.

However, in Pennsylvania, continued employment won’t cut it. That is, a non-competition agreement will be invalid if an employee signs it after commencing employment — even if you tell the employee that he/she will lose his job by not signing.

However, some smart lawyer out there — even smarter than I am — figured out that, by inserting the language “intending to be legally bound” into a non-competition agreement, Pennsylvania’s Uniform Written Obligations Act (“UWOA“) would validate the agreement — even without any additional consideration.

Until now, son.

Earlier this week, in Socko v. Mid-Atlantic Systems of CPA, Inc. (opinion here; Socko here), the Pennsylvania Superior Court said the UWOA exception be like this won’t save a non-competition agreement otherwise lacking in consideration:

“Language in an employment contract that the parties intend to be legally bound does not constitute valuable consideration in this context….Contractual language satisfying the UWOA does not provide the employee with any actual benefit, and thus cannot suffice as a form of consideration that is adequate to support the later enforcement of the covenant not to compete against the employee.”

While the Pennsylvania Supreme Court has yet to weigh in on this issue, employers would be wise to play it safe and offer employees sufficient consideration to support a covenant not to compete: either initial employment or, if the employee signs the agreement after employment begins, something else of sufficient value.

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If you’re on LinkedIn, consider joining the discussion of news, trends and insights in employment law, HR, and the workplace, by becoming a member of The Employer Handbook LinkedIn Group. Tell ’em Meyer sent you.