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?
[Hey kettle! Last chance to get yourself a copy of my recent FMLA/ADA/WC webinar. Email me and link you to both the webinar and the slide deck. Gratis].
Well, recently, I read this post from Lydia DePillis on the Washington Post Wonkblog. Ms. DePillis’s post highlights a recent study from economists Evan Starr, JJ Prescott, and Norman Bishara, which shows that
orange non-competes are the new black. Sure, they tend to be more prevalent in industries requiring employees with deeper skill sets, earning the bigger bucks. (At the other end of the spectrum, only about 3% of food service workers enter into one). But, here’s what really caught my eye:
“And overall, only about 10 percent of workers who’ve signed a non-compete ever try to argue over it, with most assuming that it’s either not negotiable or that doing so would cause tension with an employer.”
Wow! I get that the employer is generally in a stronger bargaining position, but 90% of employees just sign it?!?
Alright, does that mean its open season on getting your entire workforce to sign up? Well, the Jimmy John’s employees who signed ’em are suing and seeking class certification. So, think twice before forcing those restrictions on lower-wage earners, ‘specially those who aren’t privy to the secret sauce, and those who may not place your business at a competitive disadvantage if they went to work for the competition.
I’m thinking more in terms of enforcement considerations. Generally, courts look for employers to present a legitimate business reason to enforce a restrictive covenant. One way to undermine that is with selective enforcement. You see, while it’s not required that you enforce all of your restrictive covenants as to all former employees, if you selectively enforce them, you may create a viable argument for those individuals against whom you seek to enforce the agreement that there is no legitimate business reason to support the restriction. Indeed, you’ll be left to explain to a judge why you enforced some and not others.
And, with many judges inclined to throw shade at restrictive covenants, you may be left with an agreement that’s not worth the paper on which it is printed.