Posts tagged with "confidentiality"

Connecticut Non-Compete Prohibits Client Solicitation in Investment Services Industry

In Robert J. Reby & Co. v. Byrne, 2006 Conn. Super. LEXIS 2115, Mr. Patrick Byrne worked at Robert J. Reby & Co., a financial firm in Danbury, Connecticut, as a registered investment advisor from June 2005 to July 2005.  The company advises high net worth individuals and families in the areas of trusts, wealth management, and taxation.  Mr. Byrne signed an employment contract with Robert J. Reby & Co. wherein it contained a non-compete agreement that stipulated he be prohibited from soliciting the company’s clients or disclosing any of its confidential information in the event of his termination.  Following Mr. Byrne’s short employment with Robert J. Reby & Co. he began to work at Aspetuck Financial Management, LLC, a wealth management firm based in Westport.   Robert J. Reby & Co. alleged that Mr. Byrne solicited its clients for his new firm, Aspetuck, in direct violation of the non-compete agreement.  Mr. Byrne countered that the provisions of the non-compete were unreasonable in the sense that it placed an excessive restraint on his trade and prevented him from pursuing his occupation.

The court held that the non-compete agreement between Mr. Byrne and Robert J. Reby & Co. contained reasonable terms and was enforceable.  It failed to see any merits in Mr. Byrne’s claim that the agreement was too broad and created an insurmountable occupational hardship.  The provisions of the agreement only restricted a very small segment of Mr. Byrne’s occupational activities.  The terms he agreed to only prevented him from soliciting the specific and limited group of people that were clients of Robert J. Reby & Co..  The court held that the covenant was not a pure anti-competitive clause because it did not prevent him from engaging in the investment services industry as a whole.  This limited scope with regard to the prohibition levied upon Mr. Byrne caused the agreement to be reasonable and therefore enforceable.

The court also took time to discuss the public policy behind finding the non-compete agreement enforceable and establishing the legitimacy of the agreement.  Companies, according to the court, have a legitimate interest in protecting their business operations by preventing former employees from exploiting or appropriating the goodwill of its clients that it developed at its own, and not the employees’, expense.

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment contract, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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Court Uses Connecticut Law to Supersede Massachusetts Law in Application of Non-Compete Agreement

In Custard Insurance Adjusters v. Nardi, 2000 Conn. Super. LEXIS 1003, Mr. Robert Nardi worked at Allied Adjustment Services’ Orange, CT office beginning in September 1982 as the vice president of marketing, overseeing the adjustment of claims for insurance companies and self-insurers.  The company had Mr. Nardi sign non-compete and confidentiality agreements as a term of his employment.  The agreements established that he could not solicit or accept claims within a fifty-mile radius of Allied’s Orange office for a period of two years following his termination.  The agreements further specified that the names and contact information of Allied’s clients were the company’s confidential property.  The choice of law provision stated that Massachusetts law would be controlling (Allied had its headquarters in Massachusetts).  On September 1, 1997, Allied sold its business and all its assets, including its non-compete agreements, to Custard Insurance Adjusters.  Mr. Nardi became increasingly worried about future employment at Custard when the company restructured its compensation format, allegedly decreasing his annual income by 25%.  At this point, Mr. Nardi began to inquire about employment at other companies and in particular contacted Mr. John Markle, the president of Mark Adjustment, with whom he had a previous professional history.  He also arranged meetings between Mr. Markle and four other current Custard employees to discuss switching companies.  While the companies are competitors in the insurance industry, Mark’s business was restricted to the New England region while Custard operated nationally.  Custard terminated Mr. Nardi and asked the court to enforce the non-compete agreement.

The court first sought to tackle the issue of the choice of law provision since it designated Massachusetts law as controlling but this lawsuit was brought in Connecticut state court.  The court asserted its authority over the issue and case because it could not ascertain any “difference between the courts of Connecticut and Massachusetts in their interpretation of the common law tort breach of fiduciary obligation brought against a former officer of a corporation”.  The court emphasized that above all else, the legal issue at hand was that of contractual obligations and a company’s business operations.  It asserted its authority in this respect by stating it believed “that the Massachusetts courts interpret the tort of tortious interference with contractual and business relationships the same way our [Connecticut’s] courts do”.  Additionally, the court cited that the application of Massachusetts law would undermine Connecticut’s policy to afford legal effect to the Connecticut Unfair Trade Practices Act (CUTPA) and Connecticut Uniform Trade Secrets Act (CUTSA), two-state statutes used by Custard to sue Mr. Nardi.

Next, the court addressed the enforceability of the non-compete agreement signed by Mr. Nardi and Allied.  Mr. Nardi contended that the provisions of the agreement were only binding upon the signatory parties (himself and Allied) and that Custard lacked the authority to enforce its provisions.  He asked the court to deny Custard’s request to enforce the non-compete because it was “based on trust and confidence” between the signatory parties and “was thus not assignable”.  The court rejected this train of thought because the non-compete explicitly contained an assignability clause and it held that the non-compete covenant was properly and legally transferred to Custard under Massachusetts law.

Mr. Nardi based a substantial portion of his defense on the claim that Custard violated, and therefore invalidated, the agreement when it modified his compensation format.  He alleged that he was the victim of unjustified reductions in his professional responsibilities and compensation following Custard’s acquisition of Allied in 1997.  Mr. Nardi however was still an executive at the new company despite a reduction in rank and he himself had expressed excitement about becoming an executive at a national, instead of a regional, company.

The court ultimately found the non-compete to be valid and enforceable, therefore granting Custard’s request for injunctive relief.  It assessed the facts of the case and Mr. Nardi’s current position to amend the time restriction of the agreement, however.  Taking into account that he was starting a family and had a young child in conjunction with estimates that the full restrictions could amount to a 60-70% loss of business for Mr. Nardi, the court reduced the time limitation from two years to six months.  The court concluded that while the provisions were reasonable at face value, they could have unforeseen consequences that would have severely impaired Mr. Nardi’s ability to make a living in order to provide for his family.

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Connecticut Federal Court Applies Louisiana Law to Enforce Non-Compete to Protect Confidential Information

In United Rentals, Inc. v. Myers, 2003 U.S. Dist. LEXIS 25287, United Rental, Inc. was a Delaware corporation with principal business operations in Connecticut that employed Ms. Charlotte Myers in its Shreveport, Louisiana office from May 20, 2002, to March 7, 2003.  She signed an employment agreement with United Rentals on her first day of work that contained non-compete and confidentiality clauses that prohibited employment for a period of twelve months at any competing company located within one hundred miles of a United Rentals location where she worked.  The restrictive covenants further stated that the state and federal courts in Fairfield County, Connecticut would have jurisdiction in the event that legal proceedings ensued.  Upon her voluntary termination from United Rentals, Ms. Myers began to work at Head & Enquist Equipment, Inc., a competitor, at an office located approximately ten miles away from the United Rentals’ Shreveport office.  United Rentals contacted her to remind her of the restrictive covenants and her obligations under them but she continued her employment with Head & Enquist.  United Rentals sued Ms. Myers in Connecticut federal court for breach of the non-compete and confidentiality agreements and sought a court injunction to enforce their provisions.  The court found in favor of United Rentals and granted its request to enforce the non-compete agreement.

Ms. Myers presented various arguments to the court to persuade it to deny enforcement of the agreement, but the court ultimately found in favor of United Rentals.  She argued that Louisiana law should be controlling in the legal dispute, and further asserted that Louisiana law does not permit “choice of law” clauses in employment agreements.  The court investigated Ms. Myers’ contention and explained that the proper procedure to determine if a “choice of law” clause is permissible is to consult the law of the state being selected, in this case, that of Connecticut.  Connecticut law however cannot be the “choice of law” state when there is another state with a “materially greater interest…in the determination of the particular issue”.  The court held that Louisiana did in fact have a greater interest in the dispute and thus Louisiana law was applicable and controlling for the case.

Although Louisiana law is less than favorable to United Rentals with regard to “choice of law” clauses, it still recognizes that parties are entitled to a remedy in connection with a violation of a confidentiality agreement “if the material sought to be protected is in fact confidential”.  Courts generally view the disclosure of confidential information as sufficient evidence for a company to establish that it would suffer irreparable harm if an injunction were not granted.  During her employment with the company, Ms. Myers was exposed to and had access to United Rentals’ trade secrets, contract details, customer data, financial information, and marketing plans/strategies.  The court held that this was clearly sensitive and confidential information, the content of which entitled United Rentals to protection in the form of a court-ordered injunction.

The court held for United Rentals despite applying Louisiana law in response to Ms. Myers’ justified assertion that this specific “choice of law” provision was not valid.  Although Louisiana law shuns “choice of law” provisions in non-compete agreements, it does support injunctions when it is necessary and proper for a company to protect its confidential business information.

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

What is the enforceability of an employment contract in Connecticut?

In Connecticut, the enforceability of an employment contract is based on general contract principals. This contract can be verbal, written or a combination of the two. In addition, employment contracts in Connecticut can be either express or implied. An employment contract is an express contract if it is written and signed by both parties. A valid express employment contract will contain wording that describes the job duties, working conditions, compensation, benefits and other employment details.

If, alternatively, an employment contract is implied, the terms of the contract would come from the conduct of the parties, verbal promises made before employment started, information stated in an employee handbook, promises made in an offer letter, and other sources.

Today, most employers have their employees sign a document agreeing to at-will employment as opposed to a defined term in an employment contract. This way, either the employer or the employee may end the employment relationship at any time, and usually for any reason.

In any case, Connecticut courts regularly find employment contracts enforceable against both parties. Such agreements will be upheld by Connecticut courts as long they do not violate any laws and were not entered fraudulently, under duress, or by mistake of the parties. If valid, both parties to the contract will be held responsible for abiding by its terms and liable for any breach. Frequently, allegations of breach of an employment contract involve issues of compensation and termination of employment.

If you are interested in drafting an enforceable employment contract, or interested in determining whether an employment contract you have already signed is binding, please feel free to call the Employment Law Group of Maya Murphy, P.C. in Westport, CT at 203-221-3100 or email Ask@mayalaw.com today.

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What’s In a Separation Agreement?

With the economy where it is, the employment lawyers in the Westport, Connecticut office of Maya Murphy, P.C. are frequently asked to review and negotiate separation agreements for terminated employees.  These agreements often appear similar in form and content but must be carefully scrutinized, as they can contain hidden “trip wires” that can have a profound and long-lasting effect on the former employee’s job prospects.  Here are some of the things to look out for.

Most separation agreements contain restrictive covenants—confidentiality, non-solicitation, or non-competition clauses.  The first two—confidentiality and non-solicitation—are typically non-controversial, as they often confirm pre-existing obligations owed an employer by a former employee.  The last—non-competition—is usually a point of contention, as it impacts directly the employee’s ability to find a new position.  We have blogged extensively on non-competes, their interpretation and enforceability, etc. and readers are invited to review those prior posts.  But other terms and conditions of a separation agreement deserve your attention, as well.

First of all, do not be surprised by the length of a separation agreement.  A federal statute called the Older Worker’s Benefit and Protection Act requires the inclusion of extensive release language, and such things as a 21 day review and seven day revocation period.  Here are some of the other things you should be on the lookout for:

  • Consideration:  Make sure all of the severance benefits are correct and clearly stated.  This includes severance pay, COBRA coverage, etc.  Do not leave anything to inference or implication.
  • Confirmation that No Claims Exist/Covenant Not to Sue: Notwithstanding the comprehensive release language, some separation agreements will also require the employee to state that he/she is not aware of any factual basis to support any charge or complaint and that the employee will forego suit, even if such a claim exists.
  • Non-disparagement: Both sides often agree that neither will say anything to disparage the other.  Sometimes (particularly in the financial industry), a separation agreement will contain a “carve out” for employer reporting to FINRA or the SEC.  In such a case, it is important to have the agreement state that as of the employee’s separation date, the employer was not aware of any reportable event or information that would warrant comment or notation on a Form U-5.
  • Governing Law:  Employment law does not travel well across state lines.  For example, California law is much different than Connecticut’s.  Large companies will sometimes have their separation agreements governed by the law of the state where it has its headquarters, irrespective of the actual place of work of the departing employee.
  • Acknowledgement of Non-Revocation: An employee has seven days within which to revoke acceptance of a separation agreement.  Some companies adopt a “belt and suspenders” approach and require the employee to acknowledge in writing a negative—that they have not revoked such acceptance.

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues.  203-221-3100.

 

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Five Things You Need to Know About Connecticut Separation Agreements

As a result of the state of the economy, in general, and in Fairfield County, in particular, we in the Westport, Connecticut office of Maya Murphy, P.C. have seen a spate of Separation Agreements brought to us by recently terminated employees. Our experienced employment-law attorneys review and critique these Agreements, and often advocate on behalf of our clients to enhance a separation package.

Here are five things you need to know about Separation Agreements:

They are here and more may be on the way. Companies are scrutinizing their bottom lines to try to increase profits, decrease expenses, and improve share value or owner’s equity. If sales can’t be increased or cost-of-goods-sold decreased, one alternative is to cut personnel. Often senior (and more highly paid) employees are let go in favor of younger (i.e., “cheaper”) employees, thereby also raising the specter of an age discrimination claim (a topic deserving of its own post).
They are complex. For an employee over the age of 40, a federal statute known as the “Older Workers Benefit Protection Act” requires that your Separation Agreement contain certain provisions, including a comprehensive release of all claims that you might have against your employer. The statute also gives you specific time periods to review the Agreement prior to signing, and even to rescind your approval after you have signed. It is not uncommon to have Separation Agreements exceed 10 pages in length. All of the language is important.
They are a minefield. Separation Agreements frequently contain “restrictive covenants,” usually in the form of confidentiality, non-solicitation, and non-competition provisions. These can have a profound effect on your ability to relocate to another position and have to be carefully reviewed and analyzed to avoid potentially devastating long-term consequences after the Agreement has been signed and the revocation period has expired.
They are not “carved in stone.” Although many companies ascribe to a “one size fits all” and a “take it or leave it” policy with regard to Separation Agreements, such is not necessarily the case. Often, Maya Murphy employment attorneys can find an “exposed nerve” and leverage that point to obtain for a client more severance pay, longer health benefits, or some other perquisite to ease the client’s transition into a new job with a new employer. Every case is factually (and perhaps legally) different and you should not assume that your severance package should be determined by those that have gone before you.
You need an advocate. You need an experienced attorney to elevate discussion of your Separation Agreement above the HR level. HR directors have limited discretion and are tasked with keeping severance benefits to an absolute minimum. Maya Murphy’s goal is to generate a dialogue with more senior management to drive home the point that a particular client under certain circumstances is equitably entitled to greater benefits than initially offered.
If you find yourself in the unfortunate position of having been presented with a Separation Agreement, you should contact an experienced employment law attorney such as Robert Keepnews, Esq. in our Westport, Connecticut office. Call (203) 221-3100 or e-mail him at rkeepnews@mayalaw.com.

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Enforcing Non-Competes Associated with Sale of Company and Goodwill

Enforcing Non-Competes Associated with Sale of Company and Goodwill
Kim’s Hair Studio, LLC v. Rogers, 2005 Conn. Super. LEXIS 1805

Ms. Dorothy Rogers owned a hair salon in Higganum, Connecticut called Dotties Creative Cuts and entered into an agreement to sell the company’s “assets, goodwill, and client lists” to Kim’s Hair Studio, LLC for the amount of $20,000. This transaction essentially made Ms. Rogers a new employee of Kim’s hair Studio and as such, she was required to sign a non-compete agreement that prohibited her from offering competing services for twelve months after her termination within ten miles of 323 Saybrook Road, the primary work location of Kim’s Hair Studio. The parties executed non-compete and confidentiality agreements on August 23, 2004. Ms. Rogers did not like how the salon was being run by the company’s management and voluntarily terminated her employment in order to work at a new hair salon that was located a mere one-half mile away. Ms. Rogers additionally removed a rolodex containing Kim’s Hair Studio’s client information and began to contact them to solicit their business. Kim’s Hair Studio sued Ms. Rogers and requested that the court enforce the non-compete and confidentiality agreements.
The court granted the request for an injunction and ordered the enforcement of the agreements’ provisions. It concluded that the restrictions were reasonable in scope and that Ms. Rogers’ action had amounted to a breach of the covenant between the two parties. Kim’s Hair Studio had legitimate interests in executing non-compete agreements with its employees because its goodwill and client clients were essential assets that Kim’s Hair Studio invested resources in to acquire and maintain. The restrictive covenants were designed to prevent the loss or infringement of these assets and ensure that Kim’s Hair Studio was not negatively affected due to an employee’s termination, whether voluntary or involuntary in nature.
The court reasoned that a party is entitled to an injunction restraining further breach of a restrictive covenant when it demonstrates that the other party has or is very likely to breach the agreement. Additionally, the court noted Connecticut courts’ willingness to enforce a non-compete agreement when it is made in connection with the sale of a company and its goodwill. These legal principles, in conjunction with reasonable and limited restrictions, allowed the court to conclude that the non-compete agreement between Ms. Rogers and Kim’s Hair Studio was valid and enforceable under Connecticut law.
If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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Non-Compete Agreements in the New Haven Salon Industry

Non-Compete Agreements in the New Haven Salon Industry
Sabatasso v. Bruno, 2004 Conn. Super. LEXIS 899

Mr. Pascale Sabatasso owned SoHo Hair Group Day Spa where he had provided salon services for over twenty years and employed approximately twenty-two employees. He hired Ms. Jody Brinkmeyer in June 2001, Ms. Jo Bruno in September 2001, and Ms. Cara Hanson in February 2002 to work as stylists. Pursuant to his long-standing employment policies, he had the three women sign non-competition and confidentiality agreements as a condition to their employment. The restrictive covenants prohibited the women for twelve months following termination from rending competing services within ten miles from the center of New Haven, soliciting SoHo clients, or soliciting SoHo employees. This clause created a restricted area that included all or part of New Haven, North Haven, East Haven, West Haven, Hamden, Woodbridge, Orange, and Branford. Ms. Sabatasso justified the need for such a restrictive covenant in order to protect the salon’s investment in the form of the expenses incurred associated with the training, education, and marketing of its stylists.
The three women voluntarily terminated their employment at SoHo on April 26, 2003 and began to work at Designers, a competing salon located in Orange, a city well within the restricted area defined by the non-compete agreement. Mr. Sabatasso’s legal representation sent the women letters on May 15, 2003 stating that he would withdraw legal action if they immediately terminated their employment with Designers. All three did in fact terminate their employment at Designers to pursue other employment options. Ms. Brinkmeyer began to work as a stylist at a salon in Southbury (a city outside of the restricted area), Ms. Hanson lived in Woodbridge but did not work as a stylist, and Ms. Bruno provided styling services out of her home in East Haven and the homes of former SoHo clients, the majority of which were located within the restricted area. Ms. Sabatasso proceeded to sue the three women in Connecticut state court and requested the enforcement of their respective non-compete agreements.
The court granted an injunction with respect to Ms. Bruno but denied the requests for injunctions for Ms. Brinkmeyer and Ms. Hanson. The holding stated that Ms. Bruno “shall adhere to all of the terms and conditions provided for in the agreement for a period of one year from the date of her voluntary termination”. The court found that only Ms. Bruno had breached the non-compete agreement and that the continued activities of Ms. Brinkmeyer and Ms. Hanson were permissible and in accordance with the covenant. The former employees presented several arguments as to why the agreement was unreasonable but the court concluded that its provisions were in fact reasonable and enforceable in the event of a breach, as was the case with Ms. Bruno.
SoHo, according to the court, as a matter of public policy was entitled to protect its proprietary property including its customers for a reasonable period. One year was not so extreme or restrictive and as such, the court found this to be a reasonable restriction. Additionally, the court concluded that the ten-mile restriction was reasonable given the facts of the case and the circumstances of the salon industry in the New Haven area. Seventy-five percent of SoHo’s clients lived within the ten-mile radius and the company had an interest to protect its proprietary property within that area. The court also noted that there were three hundred to four hundred salons located in non-restricted areas within a thirty-minute drive from the women’s homes. Two of the women testified that a thirty-minute drive was acceptable and the court did not believe that this amounted to an unreasonable hardship. This finding demonstrated that the provisions of the non-compete did not overly restrict the women’s ability to pursue their profession or find new employment at a salon that would not violate the covenant.
If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

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What You Need to Know About Non-Compete Agreements

In the current economic environment, understanding your obligations under a non-compete agreement could be essential to finding new employment. In uncertain times, an employee may not understand that not all non-compete agreements are enforceable. Here are seven (7) important things to know about non-compete agreements.

(1) Courts do not view all non-compete agreements equally: Courts view non-compete agreements ancillary to the sale of a business or between partners differently than they view non-compete agreements between an employee and employer. “When employee agrees to be subjected to future work restrictions, he or she does so in order to obtain employment and ordinarily gets nothing in return for giving up this important freedom. Thus the employee is at a great bargaining disadvantage.” CT Cellar Doors, LLC v. Stephen Palamar, 2010 Conn. Super. LEXIS 3247, J.D. of Waterbury, Docket No. UWY-CV-10-5016075-S (2010). Therefore, the courts will view such a non-compete with great scrutiny.

(2) Reasonableness requirement: By definition, a non-compete is a restrictive covenant that prevents employees from competing with their former employers after termination thereby creating a restraint on the free market. Given this, Connecticut courts may find that these covenants are against public policy. Consequently, non-compete agreements are only enforceable if the restraint imposed is reasonable.

(3) Courts consider multiple factors in evaluating the reasonableness of a non-compete: In deciding whether a particular non-compete agreement is reasonable, the court will look to the following factors: “(1) the length of time the restriction operates; (2) the geographical area covered; (3) the fairness of the protection afforded to the employer; (4) the extent of the restraint on the employee’s opportunity to pursue his occupation; and (5) the extent of interference with the public’s interests.” Robert S. Weiss and Associates, Inc. v. Wiederlight, 208 Conn. 525 (1988). The Connecticut Appellate Court has instructed that “the five pronged test is disjunctive; a finding of unreasonableness in any one of the criteria is enough to render the covenant unenforceable.” New Haven Tobacco Co., Inv. v. Perrelli,18 Conn. App. 531 (1989).

(4) Involuntarily termination not required: A prevalent feeling among employees is that if “let go,” a non-compete should not apply. However, this is not the law. When reviewing a non-compete agreement for reasonableness, the Court will not look to whether the employee left his position voluntarily or involuntarily.

(5) Geography: “The general rule is that the application of a restrictive covenant will be confined to a geographical area which is reasonable in view of the particular situation.” Scott v. General Iron, 171 Conn. 132 (1976) (upheld statewide restriction). Geographic restrictions should be “narrowly tailored to the plaintiff’s business situation.” Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. at 531. In CT Cellar Doors, LLC v. Stephen Palamar, supra, the Court held that a three-year restriction that covered the entire State of Connecticut was unenforceable, unfair and unreasonable restraint of trade and was contrary to public policy. Compare that to Robert S. Weiss and Associates, Inc. v. Wiederlight, supra, where the Supreme Court held that a two-year restriction that covered a 10-mile radius of Stamford, was narrowly tailored and therefore reasonable. See also, Access America, LLC v. Mazzotta, 2005 Conn. Super. LEXIS 2597, J.D. of Middlesex, Docket No. CV-O5-4003389 (2005)(15-mile restriction upheld); compare, Trans-Clean Corp. v. Terrell, 1998 Conn. Super. LEXIS 717, J.D. of Fairfield, Docket No. CV-97-0348039-S (1998) (60-mile restriction held unreasonable).

(6) Duration: Connecticut courts have frequently enforced non-compete periods of a year or more. However, the courts have stated that the reasonableness of time and geographic restrictions in non-compete agreements are intertwined and “that broad geographic restrictions may be reasonable if the duration of the covenant is short, and longer periods may be reasonable if the geographic area is small.” Van Dyck Printing Company v. DiNicola, 43 Conn. Supp. 191 (1993), affirmed per curiam 231 Conn. 272 (1994) (one year); Robert S. Weiss & Assoc. v. Wiederlight, supra (two years); Hart Nininger & Campbell Assoc. v. Rogers, 16 Conn. App. 619 (1988) (two years); Scott v. General Iron & Welding Co., 171 Conn. 132 (1976) (five years); Torrington Creamery, Inc. v. Davenport, 126 Conn. 515 (1940) (two years).

(7) Forfeiture Clauses: Forfeiture clauses differ from non-compete agreements, in that the employee does not make an express promise not to compete, but rather agrees to a forfeiture of benefits if the employee engages in competition with its former employer. Despite this difference, the Connecticut Supreme Court has held that “a covenant not to compete and a forfeiture upon competing are but alternative approaches to accomplish the same practical result.” Deming v. Nationwide Mut. Ins. Co., 279 Conn. 745 (2006). Consequently, forfeiture clauses are subject to the reasonable requirement of non-compete agreements.

Before signing a non-compete agreement, speak to an attorney who is well versed in the law surrounding restrictive covenants and employment contracts. If you have already signed the non-compete agreement, contact an attorney before pursuing a course of conduct that might violate a non-compete clause. A violation of a non-compete may result in legal action brought against you by your former employer, whether or not such agreement is enforceable. Situations involving non-compete agreements are very fact specific, requiring case-by-case analysis. If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Leigh H. Ryan, Esq. by phone at (203) 221-3100 or via e-mail at LRyan@Mayalaw.com.

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What You Need to Know About Severance Packages

During these economic times, many companies big and small, are facing the hard reality of layoffs. As hard as it is for companies, it is even harder for employees. Faced with no job and a bare economy, accepting a severance package might seem like to best choice. But before signing anything, it is important to understand the basics of the severance package and the potential rights that might be relinquished in the process.

(1) Time to Consider the Severance Package: A prevalent misconception is that all employees are entitled to twenty-one (21) days to review severance package offers. Unfortunately, that is not the case. In the case where the employer is only offering a severance package to one employee, and that employee is under the age of forty (40), there is no specific time to review the documents that is required by law. However, as the severance package must be made “knowingly and voluntarily,” that allows the employee some time to consider the severance agreement. However, there is no statutory minimum.

If, however, the employee being offered the severance agreement is forty (40) years or older, they are protected by the Age Discrimination in Employment Act (“ADEA”) of the Older Workers Benefit Protection Act (“OWBPA”). By law, when only one employee is offered the severance agreement and a release of ADEA claims is included, the employer must provide the employee with twenty-one (21) days to review and consider the proposed severance agreement. Moreover, if the employer and employee engage in negotiations, the consideration period commences on the date of the employer’s final offer.

If more than one employee is terminated at or around the same time, it is considered a “group layoff.” By law, when a severance agreement is offered as part of a group layoff, and a single employee is over the age of forty (40), and a release of ADEA claims is included, then every employee regardless of age must be given forty-five (45) days to consider the agreement.

(2) Release of Claims: Most severance agreements contain a release of a variety of claims, including claims you may have based upon your age, race, national origin, gender, disability, relegation, among others. It may also include a release of all claims, whether known to you or not at the signing of the agreement. However, the United States Equal Employment Opportunities Commission (“EEOC”) has held that, although the severance agreement may restrict the employee’s ability to file a lawsuit, the release cannot restrict the rights of an employee to file a charge of discrimination with the EEOC, nor can the severance agreement limit an employee’s right to testify, assist or participate in an investigation, hearing or other proceeding conducted by the EEOC. Furthermore, the EEOC has declared that an agreement cannot waive an employee’s rights regarding acts of discrimination that occur after the signing of the agreement.

(3) Seven (7) Day Revocation Period: When a severance agreement contains an ADEA release of claims, by law, the employer must provide you with seven (7) days to revoke the agreement after signing it. This seven (7) day window cannot be waived or changed by either party.

(4) Ability to Consult with an Attorney: Severance packages generally contain more than just the release of ADEA claims, but also claims under Title VII of the Civil Rights Act, Americans with Disabilities Act, Employee Retirement Income Security Act, retaliation, whistle blowing, breach of contract, invasion of privacy, among others. Given the breadth of the claims released, before the signing of a severance agreement, it is extremely important to consult with an attorney prior to its execution. Moreover, when the severance agreement contains a release, the agreement must specifically advise the employee to seek the advice of any attorney. Faced with financial distress because of the layoff, you may not be able to think objectively concerning your rights and options. It is best to consult an attorney.

(5) Consideration: Consideration is required for every agreement. That means that an employee must receive something of value in exchange for giving up certain rights. That “something of value” must be above and beyond what the employee would otherwise be entitled to.

(6) Ability to Negotiate: Despite the “take it or leave it” undertones of an employer, generally, many employers will negotiation severance on some level. Given that, there is also a risk that an employer will revoke the offer of severance if negotiation is attempted. Your chances of negotiating successfully increase if there is a claim that your particular severance package is not fair in light of your industry, your position, or the circumstances of your employment. Additionally, the negotiations do not need to focus on the dollar amount connected with the severance agreement. Employers might be willing to extend insurance coverage, disability benefits, or other items.

(7) Gather All Information: Before deciding to accept, negotiate, or reject a severance package, it is important to understand completely what is being offered to you, including compensation, benefits and insurance. If you are in an industry that provides for deferred stock options or bonus, it is important to understand whether you would still be entitled to it. You should gather information concerning your employer’s welfare plans, health plans, vacation and sick leave policies, as well as any structured bonus plans or stock options. If the severance package is only offering you what you would be entitled to, the agreement may lack adequate consideration.

(8) Restrictive Covenants: Many employers will place some kind of restrictive covenant into the severance package. These range from confidentiality clauses, to non- disclosure agreements, to non-solicitation agreement, to non-compete agreements. Therefore, it is important to understand how signing the severance agreement may restrict your ability to find new employment.

Before you sign a severance agreement, it is important to fully understand your rights and the consequences of accepting the offer. The attorneys at Maya Murphy, P.C., have years of experience in all sectors of employment law. If you have any questions relating to your severance agreement, please contact Leigh H. Ryan, Esq. by phone at (203) 221-3100 or via e-mail at LRyan@Mayalaw.com.

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