Well, this – the issue of enforceability - is
true in states in the U.S. where state laws permit Covenants-Not-To-Compete
(CNTC.)
Time for a bit of "Legal 101" from "Reprographics 101"…..
During my
reprographics career, I agreed to (i.e., accepted and signed) two CNTC’s; the
first, when we sold Rowley-Scher Reprographics in 1988; the second, when we
sold National Graphic Imaging (NGI) in December 2007. Both of those CNTC’s provided for 5-year time
periods. And, I fully honored both. Why?
Well, because I agreed to! It’s as simple as that! If you agree to something, then why in the
world would you not want to live up to what you agreed to?
This past
weekend, while I was doing some Google-Search research – completely unrelated to the issue of CNTC’s – I came across a Court
decision that prevented an employee, who had recently resigned from employment
with one of the country’s oldest reprographics companies, from going to work
for a competitor. After I read the
court’s decision – which granted an injunction in favor of the employer – I
found a ‘case summary’ document – about this lawsuit – on the web-site of a law
firm that deals with employment/labor law.
Here’s the
beginning of the ‘case summary’ article I found:
EMPLOYER-EMPLOYEE; NON-COMPETITION — To receive judicial protection under
the non-competition provision of an employment agreement, the information that
an ex-employer seeks to be protected to enforcement of the agreement does not
have to rise to the level of the useful trade secret and could even be publicly
available if the information is highly specialized, current, not generally
known in the industry, and created and stimulated by the environment furnished
by the ex-employer.
An employee with an employment contract resigned to join a competing
company. The contract had a non-competition clause for the purpose of
protecting the ex-employer’s confidential and proprietary information. The
ex-employer sued both the departing employee and the competing company. It claimed
that the employee, as one of its top executives, had received “unfettered
access” to its business strategies and goals, and would violate the
non-competition clause if he worked for a competitor. It sought to enjoin the
executive from being employed by the competing company.
Should you care to read it, here’s a link
that will take you to the complete ‘case summary’ article:
A
well-constructed CNTC agreement is necessary for employers who may later need
to exert their rights. In this
particular case, that was done. That’s not always the case. Attorneys who specialize in labor/employment
law are the ones to go to for this type of agreement. If you have a poorly constructed CNTC
agreement, it probably won’t hold up in court.
If you are
an employee and are asked to agree to and sign a CNTC agreement, don’t sign it
until you’ve read it. If you don’t
understand it, seek legal advice. Once
you do sign it, be prepared to honor it, completely. Just a heads up, but, if you sign a CNTC
agreement and, later on, don’t live up to the terms and conditions of the
agreement, it could cost you thousands of dollars in legal fees/expenses.
For those of you who like to read legal
documents (there’s always lessons to be learned by doing this), here’s a
complete copy of the decision the court rendered in this case:
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