Posts tagged with "Connecticut labor law"

Teacher Evaluations in Connecticut

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Connecticut Teacher Evaluations

Under Connecticut General Statute §10-151b, each year teachers in Connecticut must be evaluated by either the Superintendent of Schools or by someone appointed by the Superintendent.  The evaluations shall include, but is not necessarily limited to, strengths, areas needing improvement, strategies for improvement, and multiple indicators of student academic growth.  In the event that a teacher does not receive a summative evaluation during the school year, the teacher must receive a “not rated,” designation for that school year.

The Superintendent shall report both the status of teacher evaluations to the local or regional Board of Education on or before June first of each year, and the status of the implementation of the teacher evaluation and support program, including the frequency of evaluations, aggregate evaluation ratings, the number of teachers who have not been evaluated, and other requirements as determined by the Department of Education, to the Commissioner of Education on or before September fifteenth of each year.

If a teacher believes that the proper procedure was not followed during their review and/or evaluation, the teacher should look to the collective bargaining agreement maintained within the School District, as Connecticut defers to such agreements for grievance procedures on evaluations.

Each local and regional Board of Education must adopt and implement a teacher evaluation and support program.  If a local or regional Board of Education is unable to develop a teacher evaluation and support program through mutual agreement with a Professional Development and Evaluation Committee, then the Board of Education and the Professional Development and Evaluation Committee shall consider the Model Teacher Evaluation and Support Program adopted by the State Board of Education as a rubric and can adopt the model if agreed upon.  C.G.S. §10-151b(b).

Teacher Evaluation and Support Program Guidelines

As of July 1, 2012, the State Board of Education has adopted, in consultation with the Performance Evaluation Advisory Council, guidelines for a Model Teacher Evaluation and Support Program. Such guidelines include, but are not limited to:

(A) the use of four performance evaluations designators: Exemplary, Proficient, Developing and Below Standard;

(B) the use of multiple indicators of student academic growth and development in teacher evaluations;

(C) methods for assessing student academic growth and development;

(D) a consideration of control factors tracked by the state-wide public school information system that may influence teacher performance ratings, including, but not limited to, student characteristics, student attendance and student mobility;

(E) minimum requirements for teacher evaluation instruments and procedures, including scoring systems to determine Exemplary, Proficient, Developing and Below Standard ratings;

(F) the development and implementation of periodic training programs regarding the teacher evaluation and support programs to be offered by the local or regional Board of Education or Regional Educational Service Center for the school district to teachers who are employed by such local or regional Board of Education, whose performance is being evaluated, and to administrators who are employed by such local or regional Boards of Education and who are conducting performance evaluations;

(G) the provision of professional development services based upon the individual’s or group of individuals’ needs that are identified through the evaluation process;

(H) the creation of individual teacher improvement and remediation plans for teachers whose performance is developing or below standard, designed in consultation with such teacher and his or her exclusive bargaining representative for certified teachers and that

(i) identify resources, support and other strategies to be provided by the local or regional board of education to address documented deficiencies;

(ii) indicate a timeline for implementing such resources, support, and other strategies, in the course of the same school year as the plan is issued; and

(iii) include indicators of success including a summative rating of proficient or better immediately at the conclusion of the improvement and remediation plan;

(I) opportunities for career development and professional growth; and

(J) a validation procedure to audit evaluation ratings of exemplary or below standard by the department or a third-party entity approved by the department.

C.G.S. §10-151b(c)(1).

Confidentiality Rule and its Exceptions

After a teacher has received their performance evaluation, Connecticut General Statute §10-151c ensures confidentiality from the public. “Any records maintained or kept on file by the Department of Education or any local or regional board of education that are records of teacher performance and evaluation shall not be deemed to be public records…provided that any teacher may consent in writing to the release of such teacher’s records by the department or a board of education.”

However, Connecticut does provide certain exceptions to the confidentiality rule, providing that records maintained or kept on file by the Department of Education or any local or regional Board of Education that are records of the personal misconduct of a teacher, shall be deemed to be public records and shall be subject to disclosure in certain circumstances.  Further, disclosure of such records of a teacher’s personal misconduct shall not require the consent of the teacher.

Despite confidentiality, the teacher is allowed access to his or her personnel file and its contents under Connecticut General Statute §10-151a.  The teacher shall be entitled to knowledge of, access to, and, upon request, a copy of supervisory records and reports of competence, personal character and efficiency maintained in their personnel file with reference to evaluation of performance.  If a teacher would like to investigate the contents of their personnel file, that is their right under Connecticut law, but must make a request to the Board of Education of the town in which he or she is employed.

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If you are a teacher and are faced with the possibility of termination, do not hesitate to contact Joseph Maya and the other experienced employment law attorneys today at 203-221-3100, or by email at JMaya@Mayalaw.com. We have the experience and knowledge you need at this critical juncture. We serve clients in both New York and Connecticut including New Canaan, Bridgeport, White Plains, and Darien.

Employer Remedies for Violations of Restrictive Covenants in New York: Breach of Fiduciary Duty & Aiding and Abetting Breach of Fiduciary Duty

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Types of Restrictive Covenants 

An agreement containing a restrictive covenant is an agreement in which one party agrees to limit his conduct in exchange for a benefit.  Two common types of restrictive covenants include agreements not to compete and agreements not to solicit.  A non-competition agreement is a contract that an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to offer or engage in services that are competitive with the other party.  A non-solicitation agreement is a contract in which an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to poach employees and/or clients of the other party.

Non-competition and non-solicitation agreements may be beneficial to employers because they offer protection for their business models, clients, and/or employees, which they may have spent years developing and training.

Restrictive Covenants Under New York Law

The laws governing non-competition and non-solicitation agreements vary from state to state.  New York law generally recognizes these restrictive covenants as enforceable to the extent they are reasonable.  For more information as to whether or not your restrictive covenants are enforceable, see Enforceability of Restrictive Covenants in New York. 

There are several types of claims available to employers for a violation of a restrictive covenant agreement that are commonly recognized by New York courts. One such claim is for breach of fiduciary duty by the party whom the employer is seeking to enforce the restrictive covenant against.

Establishing a Claim for Breach of Fiduciary Duty

In order to assert a claim for breach of fiduciary duty, an employer must first establish that a fiduciary relationship exists between the employer and the party against whom it is trying to enforce the restrictive covenant.  A fiduciary is an individual who maintains a certain legal or ethical responsibility as to another person or entity.

Since fiduciaries are individuals in positions of great trust, they are legally bound to conduct themselves with a higher level of care when it comes to their fiduciary relationship and the duties of their position, as compared to individuals conducting business at arm’s length or otherwise in the absence of a fiduciary relationship.  Fiduciaries, for example, owe their principal (here, the employer) a duty of loyalty.  A duty of loyalty requires that the fiduciary act in the best interest of the employer and avoid all personal and professional conflicts.

If the employer is able to demonstrate that the individual is or was a fiduciary at the time of breach, thereby establishing a fiduciary relationship, the employer must then demonstrate that the fiduciary engaged in misconduct, which, in turn, directly caused damage to the employer.  Pokoik v Pokoik, 115 AD3d 428, 982 NYS2d 67 (1st Dept 2014); Deblinger v Sani-Pine Products Co., Inc., 107 AD3d 659, 967 NYS2d 394 (2d Dept 2013); Kurtzman v Bergstol, 40 AD3d 588, 835 NYS2d 644 (2d Dept 2007).  If a fiduciary owes a duty of loyalty to an employer, directly competing with the employer or soliciting its employees and clients to leave the employer may be deemed a violation of this duty.

Separating a Breach of Fiduciary Duty Claim from a Contractual Duty

It must be noted that New York courts decline to recognize a breach of fiduciary duty claim if it is not separate and distinct from a contractual duty, which may be pursued via a breach of contract claim.  Brooks v Key Trust Co. Nat. Ass’n, 26 AD3d 628, 809 NYS2d 270 (3d Dept 2006); William Kaufman Organization, Ltd. v Graham & James, LLP, 269 AD2d 171, 703 NYS2d 439 (1st Dept 2000); Kassover v Prism Venture Partners, LLC, 53 AD3d 444, 862 NYS2d 493 (1st Dept 2008); Sally Lou Fashions Corp. v Camhe-Marcille, 300 AD2d 224, 755 NYS2d 67 (1st Dept 2002); Mandelblatt v Devon Stores, Inc., 132 AD2d 162, 521 NYS2d 672 (1st Dept 1987).

Aiding and Abetting a Breach of Fiduciary Duty 

A related claim that an employer may have available to it is a claim for aiding and abetting a breach of fiduciary duty.  This is the type of claim that an employer would assert against a party who encouraged or assisted a fiduciary to breach one of their duties.  The party accused of aiding and abetting need not have any fiduciary duty to the employer.

In order to assert such a claim, an employer must establish 1. A breach of a fiduciary duty by the fiduciary; 2. That the defendant knowingly induced or participated in the breach; and 3. That the employer suffered damages as a result of the breach.  Bullmore v Ernst & Young Cayman Islands, 45 AD3d 461, 846 NYS2d 145 (1st Dept 2007); Global Minerals and Metals Corp. v Holme, 35 AD3d 93, 824 NYS2d 210 (1st Dept 2006); Kaufman v Cohen, 307 AD2d 113, 760 NYS2d 157 (1st Dept 2003).

A defendant knowingly participates in a breach of a fiduciary duty if he provides substantial assistance to the violating fiduciary.  “Substantial assistance” has been defined by the courts to mean that a defendant affirmatively assists, helps conceal or fails to act when required to do so, thereby enabling the breach to occur.  Sanford/Kissena Owners Corp. v Daral Properties, LLC, 84 AD3d 1210, 923 NYS2d 692 (2d Dept 2011); Kaufman, 307 AD2d 113, 760 NYS2d 157.

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If you are an employer seeking to enforce a restrictive covenant or a party who is subject to a restrictive covenant, contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 for a complimentary consultation to discuss your case.

How to Test a Non-Compete for Reasonableness and it’s Overall Enforceability

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The Test for Reasonableness/Enforceability of a Non-Compete

The application of basic contract principles is just one step in the process of enforcement of a covenant not to compete. Once the court has determined that the parties properly executed a non-compete agreement, it must analyze the enforceability of the agreement’s provisions. Connecticut has developed a five-prong test to assess the enforceability of a restrictive covenant. It examines the reasonableness of the restrictions to determine how enforcement would impact the relevant parties: the employer, the employee, and the public at large. When determining the enforceability of a Connecticut non-compete agreement, the court will look to:

  1. The reasonableness of the time restriction,
  2. The reasonableness of the geographical restriction,
  3. The degree of protection afforded to the employer,
  4. Whether it unnecessarily restricts the employee’s ability to pursue his career, and lastly
  5. The degree to which it interferes with the interests of the public.
Applying the Five-Prong Reasonableness Test

This five-prong test used by Connecticut courts is disjunctive rather than conjunctive, meaning that a non-compete agreement can be deemed unenforceable and invalidated if it negatively impacts even a single factor. A non-compete agreement is analyzed in its entirety when a court is determining its enforceability, but a single unreasonable provision can be sufficient to invalidate the entire agreement and preclude enforcement. While certain factors may assume greater importance, the legal analysis of non-compete agreements in Connecticut shows that each factor is essentially on equal footing and of equal weight when deciding the enforceability of a restrictive covenant.

The factors used in the application of the five-prong reasonableness test can be divided into two categories: enumerated restrictions and subsequent consequences of the express restrictions. Time and geographical restrictions (factors #1 and #2) generally constitute crucial provisions in the non-compete and establish the parameters for what post-termination activities are and are not permissible for the employee. Analysis of the remaining factors involves an assessment of the consequences of the enumerated restrictions and how they impact the parties and the public.

A. Temporal Limitation

The pertinent time/duration will prohibit an employee from engaging in certain enumerated activities for a specific period of time. The reasonableness of a particular time restriction will vary from case to case and will depend heavily on the particular facts of the case and the specific characteristics of the position and industry. A fifteen-year restriction may be appropriate and enforceable in one case while it would be excessive and unreasonable in another.

The nature of the industry/profession that is the subject of a non-compete agreement is critical to determining whether a contractual time restriction is reasonable and enforceable. For example, restrictive covenants in the funeral services industry can be longer due to the familial return rate and referral characteristics while courts have held that restrictive covenants in the software industry must be shorter because of the constant and “rapid changes in the software industry.”

Reasonableness of Restrictions

The reasonableness and enforceability of the time restriction can also be a function of the enumerated geographical restriction. The interrelationship between these two aspects of a covenant not to compete can be very important in determining its overall enforceability. A time restriction that on its face seems unreasonable may in fact be completely reasonable when you take into account the geographical restriction.

A lengthy time restriction on competing activities can be reasonable under circumstances where it is paired with a narrow geographical restriction. A seemingly unreasonable time restriction may be deemed reasonable under the circumstances when “read in conjunction [with] the narrow geographic restriction” contained in the agreement.

B. Geographic Limitation

For many employees, the geographical restriction can be more problematic and of greater concern than the time restriction. The courts in this state have repeatedly asserted that “the general rule is that the application of a restrictive covenant will be confined to a geographic area which is reasonable in view of the particular situation.”

The court analyzes the geographic restriction in the same manner as it evaluates the time restriction- the geographic terms are analyzed in the context of the specific facts of the situation and the particular industry in which the employer and employee are engaged. Non-compete agreements executed under Connecticut law can be invalidated when a geographic restriction is so broad that it severely limits or prevents a former employee “from carrying on his usual vocation and earning a livelihood, thus working undue hardship.”

Valid vs. Invalid Restrictions

A valid restrictive covenant will clearly define the geographic restriction prohibiting the employee upon termination from engaging in competing business activities within a specific area. The total lack of specified geographical restriction creates an unintended consequence in the form of a global restriction on competition, an effect that the courts consider “patently and grossly unreasonable.”

Courts are likely to invalidate a non-compete agreement for lack of a defined geographic restriction regardless of whether that characteristic of the agreement was intentional or purely by mistake. If intentional, a global restriction on competition is unconscionable and unenforceable under Connecticut law. Courts will also refuse enforcement of such a non-compete if the lack of geographical restriction was a mistake or error in drafting and execution. Employers should not be allowed the benefit of enforcing the agreement merely because of an unintended, ambiguous clause that was the product of sloppy drafting of the agreement.

Weighing Respective Consequences

A crucial component in analyzing the enforceability of a geographical restriction is the potential consequences for the employer and the employee. Employers have the right to protect themselves but not by seeking to impose excessive and unreasonable restrictions that needlessly harm or unduly restrict former employees. A court may deny enforcement when the restrictive covenant goes beyond protecting the employer’s legitimate interest in existing customer relationships and seeks to exclude all competition in a very large territory where the employer conducts or could possibly conduct business.

Geographical restrictions, regardless of duration, that go beyond what is required for fair protection of the employer are unenforceable on the grounds that they are unreasonable restraints of trade in direct contravention of Connecticut law. The availability of future employment for the former employee is a major factor in a court’s determination of the enforceability of a geographical restriction. A restriction will be upheld when the circumstances demonstrate that there is ample opportunity for the employee to obtain new employment outside of the contractually prohibited area without causing undue hardship(s).

Enforcing Small vs. Large Geographical Restrictions

Smaller geographical restrictions are generally easier to assess and enforce but this is not to say that a court will automatically deny enforcement of a restriction that on its face establishes a large prohibited area. Courts have enforced non-compete agreements containing a large geographical restriction clause when there are other clauses that narrow the actual prohibited area. One such case involved a restrictive covenant that prohibited competing activities for one year following termination within the area described as the “Standard Metropolitan Statistical Areas of [the] Eastern Seabord,” an area that includes metropolitan areas from Portland, Maine to Miami, Florida, and home to roughly 36% of the country’s population.

This area, at face value, is excessive and would normally be unconscionable to enforce, but the court ultimately held that the geographical restriction clause was valid and enforceable because subsequent clauses placed restrictions on the area and severely limited its impact on the employee by stating that the restriction pertained only to the employer’s clients within the six months prior to termination and on who’s account the former employee had personally worked. This was sufficient to limit the effect of the stated geographical restriction and render it enforceable in light of the peculiar circumstances surrounding the case.

Challenging the Enforceability of Geographical or Time Restrictions

When contesting the enforceability of geographical or time restrictions, the employee ultimately bears the burden of proving that a restriction is “too broad”, “unreasonable,” or “excessive.” Under Connecticut law, the challenging party bears the burden of demonstrating that the non-compete is unenforceable. The employer generally has the benefit of a rebuttable presumption that the employee must overcome to show that a restriction is unreasonable and therefore unenforceable.

C. Fair Protection to the Employer

The third prong in the test for reasonableness and enforceability of a non-compete agreement is an analysis of the fair degree of protection afforded to the employer. The courts in Connecticut have a long-standing policy of enforcing non-competes in order to protect an employer’s interests and have long recognized that a restrictive covenant is a valuable business asset that is entitled to protection.

While the employer’s interests are a valid concern, their protection cannot come at a cost of occupational ruin of former employees. The general rule with regard to analyzing the fair degree of protection for the employer is that contracts in restraint of trade “should afford only a fair protection to the interest of the party in whose favor it is made, and must not be so large in its operation as to interfere with the interests of the public [and the former employee].”

The court balances the equities for the parties involved in the legal action. Only after a court has identified and weighed the competing equities of the parties can it conclude that “although some hardship would result to the individual defendants [former employees] as a consequence of this injunction, it would not be greatly disproportionate to the plaintiff’s [employer’s] injury.” A court’s ruling will inevitably favor one party over the other, but this prong ensures that the unsuccessful party does not experience extreme and unduly harsh consequences.

D. The Ability to Secure Future Employment

The fourth prong in the test to ascertain the enforceability of a non-compete agreement is ensuring that the contractual provisions do not unnecessarily restrict the employee’s ability to pursue his or her career through securing appropriate employment upon termination. The general rule is that employers are legally permitted to protect themselves in a reasonably limited market area but may not overreach to the degree that the restriction prevents the former employee from practicing his or her trade in order to make a living.

Connecticut courts believe the interests of the employee should also be protected and that terms of a restrictive covenant become unenforceable when they block him from “pursuing his occupation and [is] thus prevented from supporting himself and his family.” This restraint of trade is a clear violation of Connecticut law and public policy that militates against unreasonable restrictive covenants.

Courts should narrowly read and interpret non-compete agreements and the clauses contained therein because “sound public policy considerations strongly militate against sanctioning the loss of a person’s livelihood.” Despite this general policy, employees remain free to covenant to refrain from competing activities in exchange for an employment benefit, a promise that is enforceable if the courts conclude that the agreement is reasonable.

E. The Public Interest

The final prong of the enforceability test is determining whether the agreement and its provisions interfere with the interests of the public. In order to be valid and enforceable, a non-compete agreement must not have a widespread detrimental effect on the public, particularly with respect to consumers. It is a fundamental tenant of Connecticut public and legal policy that agreements and specific contractual clauses cannot deny the public access to important goods or services. Therefore, the extent of the agreement’s effect on the public must be taken into account when determining whether to enforce a restrictive covenant.

Courts will examine the provisions of the agreement, keeping in mind that “the determinant is not whether the public’s freedom to trade has been restricted in any sense, but rather whether that freedom has been restricted unreasonably.” Thus, a non-compete agreement may be invalidated and enforcement denied on the grounds of the public’s interests only if interference with those interests is so significant as to be classified by the adjudicating court as “unreasonable.”

One of the chief concerns with this prong of the enforceability test is preventing monopolistic activities within certain public segments of the economy. The courts have the authority to examine the scope and severity of a non-compete agreement’s effect(s) on the public as well as the “probability of the restrictions creating a monopoly in the [relevant] area of trade.” Upon examination of the facts and the possible consequences of the restrictive covenant, Connecticut courts may deny enforcement where the agreement runs contrary to public policy and the contractual restraints are unreasonable.

The Purpose of this Enforceability Test

This enforceability test, as articulated in and enforced under Connecticut case law, is designed to protect the legitimate interests of both the employee and the employer. It is utilized in a manner that ensures that the consequences of a restrictive covenant are reasonable, appropriate for the specific circumstances, and not punitive. The enforceability test attempts to control and limit the detriments incurred by a party to the action and protect it from oppressive restrictions. In establishing enforceability, the core principle is the notion that a party should not be subject to excessive and unreasonable restrictions that were “not [designed] to protect legitimate business interests, but rather to prevent [the employee] from working for competitors.”

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Our employment law firm in Westport Connecticut serves clients with discrimination, non-compete, and general labor law issues from all over the state including the towns of Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best employment and labor law attorneys in CT on staff that can help with your Connecticut or New York education issues today.

If you have questions regarding non-compete agreements or any employment matter, contact Attorney Joseph Maya at 203-221-3100 or by email at JMaya@MayaLaw.com.

Employer Remedies for Violations of Restrictive Covenants in New York: Unjust Enrichment

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Types of Restrictive Covenants

An agreement containing a restrictive covenant is an agreement in which one party agrees to limit his conduct in exchange for a benefit.  Two common types of restrictive covenants include agreements not to compete and agreements not to solicit.  A non-competition agreement is a contract that an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to offer or engage in services that are competitive with the other party.  A non-solicitation agreement is a contract in which an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to poach employees and/or clients of the other party.

Non-competition and non-solicitation agreements may be beneficial to employers because they offer protection for their business models, clients, and/or employees, which they may have spent years developing and training.

Restrictive Covenants Under New York Law

The laws governing non-competition and non-solicitation agreements vary from state to state.  New York law generally recognizes these restrictive covenants as enforceable to the extent they are reasonable.  For more information as to whether or not your restrictive covenants are enforceable, see Enforceability of Restrictive Covenants in New York. 

There are several types of claims available to employers for a violation of a restrictive covenant that are commonly recognized by New York courts. One such claim is unjust enrichment.

Establishing a Claim for Unjust Enrichment

Three elements must be asserted to establish a claim for unjust enrichment in New York; 1. The defendant derived a benefit; 2. The benefit that the defendant derived was at the plaintiff’s expense; and 3. The basic principles of fairness and equity require restitution. The benefit derived by the defendant may be either intentional or unintentional.  For example, an employer can still assert a claim for unjust enrichment if the defendant received a benefit in error, rather than with malicious intent.

Often, employees and other individuals who are bound by restrictive covenants are given a benefit in exchange for agreeing to the restriction.  For example, an employee may be offered severance in exchange for agreeing not to compete with an employer upon separation from the employer.  An unjust enrichment claim is commonly asserted by employers when an individual violates their non-competition or non-solicitation agreement though they have received a benefit in exchange for compliance.  The relief for these types of claims often includes a return of the benefit bestowed on the violating party, among other relief that may be just and appropriate under the circumstances.

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If you are an employer seeking to enforce a restrictive covenant or a party who is subject to a restrictive covenant, contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 of JMaya@Mayalaw.com for a complimentary consultation to discuss your case.

Enforceability of Restrictive Covenants in New York

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What are non-competition and non-solicitation agreements?

A non-competition agreement is a contract that an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to offer or engage in services that are competitive with the other party.  A non-solicitation agreement is a contract in which an individual, often an employee, enters into with another party, often an employer, in which the individual agrees not to poach employees or clients of the other party.  Non-competition and non-solicitation agreements may be beneficial to employers because they offer protection for their business models, clients, and/or employees, which they may have spent years developing and training.

Non-Competition and Non-Solicitation Agreements in New York

The laws governing non-competition and non-solicitation agreements vary from state to state.  New York law generally recognizes non-competition agreements as enforceable to the extent they are reasonable.  To determine whether or not a non-competition covenant is reasonable, New York Courts apply a balancing test; Courts weigh the employee’s right to pursue employment utilizing the skills and knowledge he/she has acquired during his/her work experience that are important to his/her trade against the employer’s legitimate interest in protecting his/her business.

An example of a legitimate business interest is protecting the business from those who may try to pirate intellectual property for their own benefit.   Often these types of agreements limit the individual’s ability to engage in competitive work for a certain period of time in a certain geographic area, namely the market in which the other party offers their services.  The time period and/or geographic limitation are among the factors that a Court would review in assessing the reasonableness, and, therefore enforceability, of the provision.

Using a Non-Solicitation Agreement to Protect an Employer

New York Courts assess the reasonableness of a non-solicitation agreement by analyzing whether or not it serves a legitimate business interest of the employer.  For example, New York Courts have ruled that a non-solicitation agreement cannot prohibit a former employee from having contact with a business’s entire client base if the employee had not previously serviced the entire client base or otherwise maintained relationships with all clients.  This would be overly broad and fail to serve a legitimate business interest.

New York Courts have recognized four types of business interests that an employer may seek to shield by way of a restrictive covenant; i) protection of trade secrets, ii) protection of confidential customer information, iii) protection of an employer’s client base, and iv) protection against irreparable harm where an employee’s services are unique and extraordinary.  Silipos, Inc. v. D. Bickel, No. 05-cv-4356 (RCC), 2006 WL 2265055 at *3 (S.D.N.Y. 2006).

Employee Restraint Cannot Exceed Employer Protection

The New York Court of Appeals has stated that the restraint of these types of agreements shall be “no greater than is required for the protection of the legitimate business interest of the employer.”  BDO Seidman v. Hirschberg, 93 N.Y.2d 382, 388-389 (1999).   This means that these types of provisions cannot be unnecessarily broad or restrictive, particularly if the restriction does not serve to protect the business.  This analysis is very fact specific.  For example, in Good Energy, L.P. v. Kosachuk, 49 A.D. 3d 331, 332, 853 N.Y.S.2d 75 (1st Dep’t 2008), the Court ruled that a non-competition provision that restricted the employee from working anywhere in the United States was unenforceable because the employer only operated in eight states.

The court reasoned that restricting the employee from earning a living throughout the country, including states where the employer did not compete in the market, was unreasonable because, as to at least forty-two states, it did not serve to protect a legitimate business interest.  Alternatively, in Payment Alliance Intern., Inc. v. Ferreira, 530 F.Supp.2d 477 (S.D.N.Y. 2007), the court found the same territorial restriction enforceable because the employer did, in fact, operate throughout the United States.  Similarly, New York Courts have held that a restrictive period of six months is unenforceable in some cases while ruling that a restrictive period as long as five years is enforceable in another circumstance.

Considering Public Interest

In addition to assessing the duration, geographic scope, and business interests served by these agreements, when evaluating the enforceability of these types of agreements, New York Courts assess whether or not the provisions protect the public interest.  For example, courts have ruled that it is injurious to the public when a physician is restricted from practicing for an extended period of time within a certain area.

However, this is not to say that all medical professionals are exempt from restrictive covenants; restrictive covenants are generally enforceable against medical and dental professionals if they are reasonably limited in time and geographic scope (presuming such limitations do not injure the public i.e. patients) and serve a legitimate business purpose of the former employer.  Again, the analysis is fact-specific.

Upholding a Non-Competition Agreement in New York

There are certain circumstances in which a New York Court is more likely to deem a non-competition provision enforceable.  For example, if an employee accepts post-termination benefits from the employer (i.e. severance) in exchange for agreeing to abide by the non-compete, the Court is more likely to determine that the restrictive covenant is enforceable.  In such circumstances, the Court may even uphold the non-compete if it is otherwise unreasonable.

It is important to note, however, that some New York Courts have ruled that a non-competition agreement may not be enforced against an employee who is terminated without cause.  In such circumstances, courts have ruled that if the employer did not have a continued willingness to employ the individual, it cannot restrict the employee from finding employment elsewhere.

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If you are an employee subject to a restrictive covenant or an employer who is seeking to enforce a restrictive covenant against an employee or former employee, contact Joseph Maya, Managing Partner at Murphy, P.C. at (203) 221-3100 or directly via email at JMaya@Mayalaw.com for a complimentary consultation to discuss your case.

Receiving Both Unemployment Benefits And Severance In Connecticut

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Can I receive unemployment benefits in Connecticut if I am receiving severance from my last job?

Losing a job is a difficult time in any person’s life. In the immediate aftermath, you are left to deal with all the questions about how and where to proceed in navigating the job market. Amid that confusion, employers will also sometimes offer severance packages and request the employee to sign documents upon their discharge. The decisions you make during this time can have a profound effect on your legal rights moving forward.

Claiming Unemployment Benefits

When you are involuntarily terminated from your employment through no fault of your own, your employer should provide you with Form UC-61 from the State of Connecticut Department of Labor. You should use the information contained on the document to accurately respond to the questions contained in the online application for unemployment benefits. It is important that you file your initial claim for unemployment benefits as soon as possible. Unemployment benefit payments are generally not made retroactively. You will need to file an initial claim and then weekly claims to certify that you continue to be unemployed, report job search activities, and confirm that you are ready, willing and able to work, among other things.

In your initial claim for unemployment benefits, there will be a question concerning the gross amount of the severance payment and how many hours or days the payment represents. Section M. of the UC-61 will contain this information. Normally, an applicant’s unemployment benefits will be reduced by the severance payments. The severance payments are allocated to the weeks following the separation of employment.

The next question, however, asks whether any or all of the severance payment was conditional upon signing a separation agreement waiving your right to file a lawsuit against the employer. If the answer is yes, you will need to supply the Department of Labor with a copy of the separation agreement.

Eligibility for Benefits 

Pursuant to Connecticut General Statutes Section 31-236(a)(4), an individual is ineligible for benefits for the weeks he or she receives severance “unless the employee was required to waive or forfeit a right of claim independently established by statute or common law against the employer as a condition of receiving the payment.” Accordingly, if the severance payments are contingent on an agreement not to sue the employer, your unemployment benefit should not be reduced. If you were required to waive a common law or statutory right to receive the severance payment, it will not be deducted from your weekly benefit payment. If you did not waive such rights, then it will be deducted from your weekly benefit payment.

For instance, if the separation agreement you signed contains language such as, “in order to be eligible to receive the payments and any other benefits described herein, you are required to agree to the terms contained in this letter, including the General Release, indicate your agreement by signing and returning this letter,” you may still qualify for unemployment benefits.

To protect your claim, it is imperative that you supply the Department of Labor with your initial claim for unemployment benefits and the signed separation agreement as early as practicable.

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If you have been recently terminated through no fault of your own and have questions about your eligibility for unemployment benefits in Connecticut or if you need assistance in negotiating a severance agreement, please contact Attorney Joseph Maya of Maya Murphy, P.C. at (203) 221-3100 or JMaya@mayalaw.com.

Enforcement of a Non-Compete

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The trip-wire for the enforcement of a restrictive covenant is a breach by a former employee of contractual provisions contained in the agreement. An employer is entitled to relief if a former employee is engaging, or threatening to engage, in activities expressly prohibited by a non-compete agreement, that would cause harm to the employer. A former employee’s violation of a non-compete agreement constitutes a breach and “dictate[s] that the plaintiff is entitled to enforce the agreement.”

An employer may also be entitled to relief where the former employee has not yet breached the agreement but is threatening to do so. Under these circumstances, the former employer may be entitled to injunctive relief from the court restraining any breach irrespective of the potential damage.

Injunctive Relief

For an employer to obtain an injunction against a former employee seeking the enforcement of the non-compete agreement, it must demonstrate both breach and incurred or imminent irreparable harm. Breach alone is insufficient to warrant the issuance of an injunction and the courts have held that “a party seeking a temporary injunction must first establish irreparable harm.”

The Supreme Court of the United States has rarely commented on the subject of non-competes but in Doran v. Salem Inn, Inc., the court reiterated the traditional standard for granting injunctive relief, stating that it “requires the plaintiff to show that in the absence of its issuance he will suffer irreparable injury and also that he is likely to prevail on the merits.” Thus, a successful plaintiff must show that it has incurred or is likely to incur irreparable harm from the actual or proposed activities of a former employee constituting a contractual breach.

When determining whether a party has violated the terms of a non-compete agreement courts are sometimes faced with very peculiar circumstances that necessitate further legal analysis. Such situations include those where a party’s actions hover between the permissible and impermissible, questions regarding the similarities between old and new employment, and the permissibility of working for a former client upon termination from the plaintiff employer.

Questions of Degree

Two typical situations that require the court to determine what constitutes prohibited conduct and therefore a breach of a non-compete agreement are (a) defining the parameters of “competing business activity” and (b) discerning the permissible engagement within the restricted geographical area. Some defendants assert the defense that they were merely “marketing” and that this does not amount to a “competing business activity” that would violate a restrictive covenant.

Marketing is in fact a “competing business activity” in violation of non-compete agreements and marketing includes not only the actual sale of products or services, but also any efforts to promote and effectuate a sale of those products or services. Furthermore, the courts have stated that activities that are not competitive on their face may in fact be competitive and therefore constitute a breach of a non-compete agreement if they produce a competing activity.

A second issue is addressing a party’s actions when he engages in activities within the prohibited geographic area, even though the new employer’s place of business does not, itself, violate the terms of the agreement. Courts have consistently held that this situation involves competing business activities and breach of the restrictive covenant.

The specific location of new employment may not violate a non-compete agreement but conducting business operations and acting in furtherance of the new employment within the prohibited area does constitute a breach. Contracts that restrict employment activities focus on competing activities of former employees rather than the particular location of the employee’s new office.

Employment Similarities

Whether, or to what extent, prior and current employment is similar may also impact a court’s determination of whether a breach occurred. Employment, even with a direct competitor, will not create a breach of a non-compete agreement if the details of the case demonstrate starkly contrasting differences between the old and new positions.

A plaintiff employer has the burden of proving that it is likely to succeed on the merits of the case and that the former employee will render “similar services” to the new employer and thereby facilitate unfair economic activities. In order to receive injunctive relief from the court, the plaintiff must submit evidence demonstrating the occupational similarities and how the new employment has or is likely to result in a breach of a non-compete agreement.

Former Clients

A further bone of contention is whether covenants not to compete prohibit an employee from working for a former client that had a relationship with his or her prior employer. Courts have rejected the theory that the prohibition on competing business activities extends to former clients and have concluded that employers are not thereby entitled to enforcement of a non-compete agreement.

Injunctive relief for breach of a non-compete agreement is designed to prevent a former employee from working for a competing company rather than a former client. Connecticut courts will deny injunctive relief when “such relief appears to be more logically directed to an employee engaged in a competing business than to an employee accepting employment not with a competing business, but a former client.” The general rule in Connecticut is that working for a former client, unless specifically prohibited in the non-compete agreement, does not create a breach of the contract.

The Parol Evidence Rule

A final principle of contract law that applies to the enforcement of covenants not to compete is the application of the Parol Evidence Rule, a rule that may prohibit the use of evidence outside the four corners of the non-compete contract concerning matters included within the finalized document. The Parol Evidence Rule essentially prohibits the use of evidence not contained in a finalized agreement that vary or contradict the terms of the contract.

When litigating a case regarding the enforcement of a non-compete agreement, in most cases, parties may not present collateral evidence (written articles, oral representations, etc.) that contradict the finalized written restrictive covenant. A finalized restrictive covenant document will cause most courts to refuse admission of conflicting evidence and to admit some supplemental evidence only to clarify ambiguous provisions of the contract. The courts will consider a contract as the “final agreement” when “there is no evidence to contradict a finding that the parties intended the writing to be the final expression of the parties.”

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Our employment law firm in Westport Connecticut serves clients with discrimination, non-compete, and general labor law issues from all over the state including the towns of: Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best employment and labor law attorneys in CT on staff that can help with your Connecticut or New York education issues today.

If you have any questions or would like to speak to an employment and labor law attorney about a pressing matter, please do not hesitate to contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 or JMaya@Mayalaw.com. We offer free consultations to all new clients.

Does Termination of Employment Effect My Non-Compete?

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Termination

The enforcement of a non-compete agreement is not dependent upon the circumstances surrounding the termination of the employee. A restrictive covenant can be legally binding whether the employee voluntarily terminates his employment or the employer releases the employee from its employ. Termination does not invalidate a non-compete agreement. A non-compete agreement is legally binding and enforceable post-termination and Connecticut courts have routinely held that “termination of employment at [the] initiative of [the] employer does not itself render [a] non-competition provision invalid.” Furthermore, the enforceability of a restrictive covenant will not turn on whether an employee experienced a voluntary or involuntary termination.

Constructive Discharge

Similarly, constructive discharge does not invalidate a non-compete agreement executed under Connecticut law. A claim of constructive discharge is usually a defense offered by a former employee to argue that although he or she terminated the employment it was only as a result of employer bad faith and impropriety that rendered continued employment virtually impossible.

Constructive discharge occurs “when an employer, rather than directly discharging an individual, intentionally creates an intolerable work atmosphere that forces an employee to quit involuntarily.” The nature of termination is irrelevant to an agreement’s validity and enforceability and “under Connecticut law, there is no reason to believe that a constructive discharge invalidates a covenant not to compete when a straightforward termination otherwise would not.”

Our employment law firm in Westport Connecticut serves clients with discrimination, non-compete, and general labor law issues from all over the state including the towns of: Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best employment and labor law attorneys in CT on staff that can help with your Connecticut or New York education issues today.

If you have any questions or would like to speak to an employment and labor law attorney about a pressing matter, please do not hesitate to contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 or JMaya@Mayalaw.com. We offer free consultations to all new clients.

Relief For a Non-Compete Breach

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Legal vs. Equitable Relief

When a party commences an action against another, it can request from the court two types of relief: legal and equitable. Legal relief typically manifests itself in the form of damages, a judgment that uses money to try to right the wrong. Equitable relief usually involves an order from the court instructing a party to perform or refrain from performing a specified activity. In cases of non-compete/restrictive covenants, the employer will typically request a court order (equitable relief) seeking to enforce the provisions of the agreement and order the former employee to cease engaging in activities that violate the agreement.

In cases involving an alleged breach of a non-compete agreement, equitable relief is the preferred and most common form of relief because the plaintiff employer claims that it has experienced irreparable harm that cannot be measured in monetary terms. Additionally, equitable relief enjoins the other party from further violations of the agreement. Thus, the court order addresses both past and possible future breaches.

Legal and Equitable Relief Awards in Court

Equitable relief is the standard for non-compete agreement cases, but Connecticut courts have, on rare occasion, awarded money damages to plaintiffs as a supplement to equitable relief. For example, in National Truck Emergency Road Service, Inc. v. Peloquin, the court ordered a former employee to return documents that were used in illegal competition, and then awarded damages to the employer for losses directly connected to breach of the non-compete agreement.

In a different case the court awarded only damages, since equitable relief was not a viable option because the non-compete agreement expired by the time the plaintiff commenced the litigation. The court held that the “plaintiff’s request for injunctive relief [had] become moot” due to the expiration, but it allowed the plaintiff to proceed with the action for money damages.

The enforcing party was permitted to introduce evidence and facts that enabled the court to calculate the lost profits directly associated with the breach of the non-compete agreement. The court ultimately concluded that the plaintiff was “entitled to recover damages from the defendant in that amount as to the proven breach of the covenant not to compete.” The court, unable to grant injunctive relief, awarded damages for the breach of a restrictive covenant to compensate for the loss suffered by the enforcing party.

Contract Modification

Under Connecticut law, in cases involving an alleged breach of a non-compete agreement, it may be possible to modify the terms of the contract so as to make an otherwise unenforceable agreement reasonable and enforceable. This results when the parties specifically state in the contract that the court has the express authority to alter its terms in order to enforce it. As another possibility, the court can apply the “blue pencil doctrine,” under which the court, without the express permission of the parties, amends the terms of the agreement to render them reasonable.

The “Blue Pencil Doctrine”

Connecticut recognizes the “blue pencil doctrine” but requires parties to submit evidence from which the court can conduct an informed analysis and establish appropriate geographic and/or time boundaries. If the parties are open to court modification of unreasonable terms to facilitate a valid and enforceable agreement, the more straightforward approach is to include contractual language and clauses in the restrictive covenant itself permitting such court action. An example of such a contractual clause is:

In the event that any provision of this Agreement is held, by a court of competent jurisdiction, to be invalid or unenforceable due to the scope, duration, subject matter or any other aspect of such provision, the court making such determination shall have power to modify or reduce the scope, duration, subject matter or other aspect of such provision to make such provision enforceable to the fullest extent permitted by law and the balance of this Agreement shall be unaffected by such validity or unenforceability.

Under this scenario, both parties consent to giving the adjudicating court the express power to modify terms of the restrictive covenant in order to make the contract, as a whole, reasonable and fully enforceable under Connecticut law.

The “Blue Pencil Rule” vs. the “Massachusetts Rule”

When determining whether to modify a geographical restriction, courts will generally subscribe to and apply either the “blue pencil rule” or the “Massachusetts rule.” These rules are divergent with respect to a court’s ability to modify geographical terms based on whether the area is divisible according to the language of the contract.

The “blue pencil doctrine” permits courts to modify geographical restrictions only when the contractual language creates several distinct areas; the “Massachusetts rule” is much more lenient and allows a court to modify the terms “even though the territory is not divisible in the wording of the contract.” Connecticut courts are more receptive to the application of the “blue pencil doctrine” and feel that the “Massachusetts rule” gives the court expansive, broad powers that, when exercised, result in courts crafting new contracts between the parties.

Connecticut follows the “line of authority which states that if the territory specified in the contract is by the phraseology of the contract so described as to be divisible, the contract is separable and may be enforced as to such portions of the territory so described as are reasonable.” One such case where the court applied the “blue pencil rule” was EastCoast Guitar Center, Inc. v. Tedesco, where the court held that the original “geographic area in the agreement [was] too broad and [was] not reasonable or necessary to protect the plaintiff’s business.”

The court dissected the contractual language pertaining to the geographical restriction and reduced it to certain enumerated counties (Fairfield, Litchfield, and New Haven) in order to make the agreement reasonable and enforceable.

Modifying Time Restrictions

Modifications to contractual time restrictions can also occur based on a contractual provision or a court’s application of the “blue pencil rule.” Connecticut courts have asserted that they may “reduce the time limitation because of the ‘blue-pencil rule’ which states that under certain circumstances, a court may enforce parts of an agreement and not others.”

In the absence of a contractual provision consenting to modifications, parties can demonstrate to the court that they are open to the possibility of the court modifying the restrictions during the litigation process. This provides the court with a certain degree of freedom to assess the current time restriction and reduce its length if the court finds it excessive and unreasonable.

Courts can simply reduce the duration of the time restriction, and may instruct the parties to submit arguments regarding a potential extension to the full contractual period of time prior to expiration of the new restriction. In the latter situation, the court will consider the specific facts of the case in determining whether it is necessary to enforce the original provision of the agreement.

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Our employment law firm in Westport Connecticut serves clients with discrimination, non-compete, and general labor law issues from all over the state including the towns of: Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best employment and labor law attorneys in CT on staff that can help with your Connecticut or New York education issues today.

If you have any questions or would like to speak to an education law attorney about a pressing matter, please don’t hesitate to contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 or JMaya@Mayalaw.com to schedule a free initial consultation.

Violations of a Restrictive Covenant

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There are various circumstances under which an individual can be found in violation of a restrictive covenant. The two most common types of activity that result in litigation are (a) the solicitation of prohibited parties in violation of the time and/or geographical restrictions and (b) the unauthorized dissemination of confidential and proprietary information belonging to the plaintiff employer.

A. Solicitation

Solicitation activities can generally be divided into two categories: direct solicitation and indirect solicitation.

Direct Solicitation

Under a theory of direct solicitation, the employer alleges that the former employee personally solicited business in violation of the covenant not to compete. The employer bears the burden of proof and must submit sufficient evidence to the court showing that the former employee knowingly took action to solicit business from prohibited parties.

Indirect Solicitation

On the other hand, cases involving the theory of indirect solicitation have a plaintiff employer that “support[s] its position that one who is not a party to a non-compete contract can be enjoined from activity prohibited by the contract where the person or entity is operating indirectly for the party to the contract.” Under this scenario, the employer alleges that a former employee induced a third party to engage in activities the employee personally was contractually prohibited from doing, using knowledge or information that the employee acquired during his or her employment with the plaintiff employer.

In order to be successful in an “indirect solicitation” claim, the employer must demonstrate that the actions the nonaffiliated parties evince “conscious disregard” of the non-compete agreement by the former employee. A court may find breach even though the employee did not personally violate its terms but instead used information to induce a third party to perform activities that would otherwise be considered a contractual breach.

Allegations of impermissible solicitation are only valid and successful if the target of the solicitation is actually a prohibited party within the purview of the terms of the non-compete agreement. There are many categories of clients or customers that may or may not be protected, a characteristic that is determined by the nature of the client or customer.

Current and Past Clients

The business sources that an employer seeks to protect with a restrictive covenant are its current and past clients. A restriction limited to the plaintiff’s current and past customers is not overly broad, unreasonable, or unenforceable under the laws of Connecticut. Current clients are easily and readily identifiable, giving courts relatively few issues with determining who falls into this class of clients. On the other hand, past customers can be a bit trickier in the sense that certain companies have very long histories, a sizable client base, extensive geographical presence, and diversified subsidiaries.

Many employers place limitations in their non-compete agreements with regard to who is protected as a “past client.” Common restrictions for defining “past clients” include establishing a period of time the client has been affiliated with the company, as well as specifying that the employee is only prohibited from soliciting those clients that he or she had a professional relationship with and on whose account the employee worked. Such restrictions make the provisions themselves more reasonable, and courts look favorably on limitations that reduce the scope of the restraint on trade and appropriately define the client class.

Potential Clients

A more difficult classification of clients to identify is “potential clients.” This class is much more amorphous and, in theory, every participant in the economy could be a potential client. A restrictive covenant encompassing potential clients creates a virtually limitless prohibition on solicitation for the employee upon termination. Enforceability under this scenario greatly depends on the agreement’s definition of “potential clients.”

Restrictions on potential clients are reasonable and enforceable so long as the clients classified as such are “readily identifiable and narrowly defined.” Therefore, a clause that prohibits the solicitation of potential clients is permissible and enforceable so long as the agreement narrowly and specifically construes this class of clients.

Personal or Private Clients

Companies that engage in service-based industries – professions including but not limited to lawyers, doctors, accountants, financial advisors, hair stylists, and personal trainers – potentially have an additional class of clients to consider when drafting a restrictive covenant and suing for its enforcement. Many professionals in a service-based industry have “personal or private clients” that are not affiliated with their employer but to whom the professional provides services on the side and off the company’s clock.

Even upon executing a non-compete agreement, employees are generally not enjoined from continuing to provide services to personal or private clients. Because these clients did not have an official relationship with the employer, courts have held it would be unfair to include them on lists of prohibited clients. These personal clients are not receiving services from the employee as a result of a business connection to the employer, and as such they fall outside the protections and restrictions enumerated in any restrictive covenants.

B. Use of Confidential/Proprietary Information

The second common activity alleged to constitute breach of a non-compete agreement is the employee’s dissemination of confidential or proprietary information that gives his new employer an economic advantage, thus creating unlawful competition. Former employees cannot “use trade secrets, or other confidential information he [or she] has acquired in the course of his employment [with the plaintiff employer], for his [or her] own benefit or that of a competitor to the detriment of his [or her] former employer.”

To qualify as confidential information or a trade secret in Connecticut, the information must reflect a substantial degree of secrecy. Employers typically seek injunctive relief when the alleged breach of a restrictive covenant takes the form of the misappropriation of confidential information. Legal remedies are inadequate in most, if not all, of these cases because the “loss of trade secrets [and/or confidential information] cannot be measured in money damages…[because a] trade secret, once lost is, of course, lost forever.”

Trade Secrets

Connecticut has developed several statutes pertaining to “trade secrets” and their unlawful misappropriation that clearly contravenes non-compete agreements. A category of confidential information, trade secrets are “the property of the employer and cannot be used by the employee for his own benefit [or the benefit of another].”

Connecticut courts use the term “trade secret” to mean any “formula, pattern, device, or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” The content of a trade secret must be undisclosed, and courts will not enforce a non-compete agreement to protect knowledge that is generally and widely known in the respective industry or that is publicly disclosed.

What information qualifies as a trade secret?

When determining whether certain information qualifies as a trade secret and entitles the owner to protection under a non-compete agreement, the court examines the following factors:

(a) the extent to which the information is known outside the business,

(b) the extent to which the information is known by employees and others involved in the business,

(c) the extent of measures taken by the company to guard the secrecy of the information,

(d) the value of the information to the company and its competitors,

(e) the amount of effort and money expended by the company in developing the information, and

(f)  the ease or difficulty with which the information could be properly acquired or duplicated by others.

Misappropriating Trade Secrets and Confidential Knowledge

The elements of breach of a restrictive covenant by misappropriating trade secrets and confidential knowledge hinge on the defendant acquiring, disclosing, or using the knowledge via “improper means.” Under Connecticut law, “improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means, including but not limited to searching through trash.

Furthermore, Connecticut has a statute of limitations with regard to actions against a party for the misappropriation of trade secrets and confidential knowledge in contravention of a covenant not to compete. Parties are barred from commencing an action beyond three years “from the date the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.” The statute further states that a continuing misappropriation constitutes a single claim for the purposes of the statute of limitations.

Implied Duty of Non-Disclosure

Connecticut law espouses the principle of an implied duty to not disclose confidential information to other parties, even in the absence of a non-compete agreement. Courts routinely uphold this implied duty related to employment law and the Supreme Court of Connecticut has stated that “even after employment has ceased, a former ‘employee’ remains subject to a duty not to use trade secrets, or other confidential information, which he has acquired in the course of his employment for his own benefit or that of a competitor, to the detriment of his former employer.”

As with most rules, however, there are some limited exceptions. Business-client relationships and corresponding information that predate employment with the employer are not protected by the implied duty not to disclose. “[I]n the absence of a covenant not to compete, an employee who possessed the relevant customer information prior to the former employment is free to use the information in competition with the employer after termination of the employment relationship.”

Retaining Confidential Information

In some cases, the act of merely retaining confidential information can constitute a breach of a non-compete agreement, and the employee need not actually exploit the knowledge for the court to grant injunctive relief. In one such case, TyMetrix, Inc. v. Szymonik, an employee retained physical possession of confidential information, claiming he kept it in order to assist in the litigation with his former employer.

This act, regardless of the employee’s reasons, nonetheless violated the non-compete agreement between the employer and employee . The court specifically held that “whether Szymonik [the former employee of plaintiff employer] has used the information on the DVDs is not, at this point in the proceedings, the relevant consideration. His possession and retention of the DVDs [that contained confidential information] is in violation of the terms of the employment agreement.”

Non-compete agreements often contain a clause regarding non-disclosure of confidential information acquired or to which the employee is exposed during the employment relationship. However, some employee-employer contracts separate these restrictions into two separate agreements.

Historically, Connecticut courts have favored the enforcement of non-disclosure/confidentiality agreements compared to covenants not to compete, since the protection of a company’s proprietary and confidential information is far more clear-cut than granting an injunction that results in the restraint of trade or potential employment. Time and geographical restrictions are not necessary for the enforcement of a non-disclosure agreement, and courts have the discretion to apply the “reasonableness” test or a relaxed version of the test.

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Our employment law firm in Westport Connecticut serves clients with discrimination, non-compete, and general labor law issues from all over the state including the towns of: Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best employment and labor law attorneys in CT on staff that can help with your Connecticut or New York education issues today.

If you have any questions or would like to speak to an employment and labor law attorney about a pressing matter, please don’t hesitate to contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. at (203) 221-3100 or JMaya@Mayalaw.com to schedule a free initial consultation.