That’s the approach that many employers take when seeking to enforce a covenant not to compete with a former employee.
Non-competition agreements haven’t gotten much play on this blog. It’s like going into an ice cream shop and ordering Butter Brickle. Meh. Yet, there it is: Butter Brickle, right between classics like Vanilla and Chocolate and those newer flavors, Tahitian Vanilla and Chocolate Dreamsicle.
As a mainstay, every once and a while, I must page homage.
***spoons Butter Brickle into gaping mouth***
It’s pretty good, you know.
And non-competes….let’s discuss them too. Specifically, what happens if a former employee joins a top competitor, and, by the time a judge is ready to do something about it, the non-competition agreement is about to expire? Will the court level the playing field and restart the non-compete?
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.
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?
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.”
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.
You’re hiring for an engineer position. To assist, you engage a search firm, which finally locates an ideal candidate. After a telephone conversation, and a subsequent tour and in-depth interview, you know that you have the right person for the job. So, you prepare and send an offer letter.
The offer letter includes a summary of the position, responsibilities, location, base salary, benefits, effective date, and confidentiality. The letter also states: “You will also be asked to sign our employment/confidentiality agreement. We will not be able to employ you if you fail to do so. In addition, the first day of employment you will be required to sign an Employment Agreement with definitive terms and conditions outlining the offer terms and conditions contained herein.”
The offer letter does not contain any mention of a non-competition agreement.
“Scott, do you have a non-competition agreement?”
“Scott, do you have a confidentiality agreement?”
“No. In fact, I have a list of my own customers that I could sell to if you hire me.”
Sounds good, right. But, before hiring Scott, do you have any obligation to independently verify the facts that Scott has represented?
New Jersey employers will definitely want to click through because, last week, the New Jersey Supreme Court answered…
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