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Enforcing a Non-Compete in Connecticut

If you signed a valid non compete agreement, try not to just forget about it. Former employers are using non competes for more than just show now in days, they are enforcing them aggressively. If you are thinking about working for your former employer’s competitor, or in another area that may be covered by a non compete you previously signed, here are two ways your former employer may try to enforce the previous agreement against you.

First, attempted enforcement of a non compete agreement in Connecticut will likely begin with a Cease and Desist Letter. Once the employer has determined (or has a good faith belief) that a former employee is breaching a noncompete, typically the next step will be to engage legal counsel to send a demand or “cease and desist” letter to the employee. A well-drafted demand letter contains an accurate summary of the contractual, statutory and common law restrictions that bind the former employee, a summary of the facts showing that the former employee is in breach of his or her noncompete (or statutory or common law), a description of the harm suffered or potential harm the employer may suffer as a result of the former employee’s breach of duties, and a demand for specific actions and written assurances.

In many noncompete situations, it is also appropriate at this stage to send a separate demand letter to the former employee’s new employer setting forth the facts and arguments as to why the new employer’s engagement of the former employee will unlawfully interfere with the noncompete between the former employee and old employer. Cease and desist letters must convey the message that the former employer takes the former employee’s continuing obligations seriously and will not allow its goodwill, trade secrets or confidential information to be unlawfully misappropriated. These letters are a critical tool because many noncompete situations are resolved by settlement following the exchange of the cease and desist letter and response.

Second, and more drastically, you may be taken to court. A former employer may file suit for a temporary restraining order, an injunction, and damages. If the noncompete situation is not resolved by the sending of cease and desist letters, then the employer must assess whether it will file a lawsuit to enforce the noncompete. Unlike most lawsuits, where the goal typically is to win a judgment awarding money damages after what is usually a lengthy process leading to trial, the goal in most noncompete situations is to obtain an immediate order from the court. This order is called a preliminary injunction (or in certain emergency situations a temporary restraining order). A preliminary injunction will order the former employee (and new employer) to stop taking certain actions, such as working for a competitor altogether, calling on certain customers for the new employer, or using or disclosing confidential and proprietary information. If the former employee or new employer violates the preliminary injunction, they are in contempt of court. The idea is that the preliminary injunction will stop the conduct, preserve the status quo between the parties, and prevent further harm to the former employer. A permanent injunction is issued after trial.

Obviously, the decision to file suit and seek a preliminary injunction must be evaluated carefully given the expense and uncertainty of litigation. This is particularly so in noncompete situations where the outcome of litigation is often influenced to a large degree by particular judges’ views on noncompetes generally. In order to obtain a preliminary injunction, the employer must establish that it is entitled to such relief by showing that: the employer is likely to prevail on the merits of the case at trial; the employer faces irreparable harm; the balance of harm (that facing the employer as compared with the harm the former employee could suffer by, for example, not being able to work for a particular new employer) favors the issuance of an injunction; and the public interest is not adversely affected by the issuance of a preliminary injunction.

In addition to assessing whether this standard can be met, the employer should pause to consider whether it will come to court with “clean hands” (that is, whether it has acted fairly). The issuance of a preliminary injunction is a matter squarely in the judge’s discretion and is a matter of equity (fairness), so it is important that the employer not overreach but rather only seek the protection necessary to prevent the misappropriation of goodwill, trade secrets, and confidential information. Similarly, before embarking on litigation, the employer should evaluate whether it has breached any obligation to the former employee (such as the obligation to pay salary or commissions). Such facts will influence whether the court will grant an injunction, and also will likely result in the assertion of counterclaims against the employer in the lawsuit.

The assessment of whether to file a lawsuit must be made quickly. Delay undermines the argument that the former employee’s current actions are actively harming the employer’s business, and may in rare cases result in the former employee filing suit to obtain a declaration from the court that the noncompete is unenforceable.

If an employer is trying to enforce a non compete against you, or if you are an employer looking to enforce a non compete against a former employee, let the experience Employment Law Group of Maya Murphy, P.C. in Westport, CT help you with this process. With decades of employment law experience in the courts of both Connecticut and New York, the employment law attorneys of Maya Murphy can surely meet your non compete needs. Call 203-222-MAYA or email Ask@mayalaw.com today to schedule a consultation!

Keywords: non compete agreement Connecticut, enforcing a non compete in connecticut, non compete westport, employment law attorney westport

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Enforcing a Non-Compete in Connecticut

If you signed a valid non compete agreement, try not to just forget about it. Former employers are using non competes for more than just show now in days, they are enforcing them aggressively. If you are thinking about working for your former employer’s competitor, or in another area that may be covered by a non compete you previously signed, here are two ways your former employer may try to enforce the previous agreement against you.

First, attempted enforcement of a non compete agreement in Connecticut will likely begin with a Cease and Desist Letter. Once the employer has determined (or has a good faith belief) that a former employee is breaching a noncompete, typically the next step will be to engage legal counsel to send a demand or “cease and desist” letter to the employee. A well-drafted demand letter contains an accurate summary of the contractual, statutory and common law restrictions that bind the former employee, a summary of the facts showing that the former employee is in breach of his or her noncompete (or statutory or common law), a description of the harm suffered or potential harm the employer may suffer as a result of the former employee’s breach of duties, and a demand for specific actions and written assurances.

In many noncompete situations, it is also appropriate at this stage to send a separate demand letter to the former employee’s new employer setting forth the facts and arguments as to why the new employer’s engagement of the former employee will unlawfully interfere with the noncompete between the former employee and old employer. Cease and desist letters must convey the message that the former employer takes the former employee’s continuing obligations seriously and will not allow its goodwill, trade secrets or confidential information to be unlawfully misappropriated. These letters are a critical tool because many noncompete situations are resolved by settlement following the exchange of the cease and desist letter and response.

Second, and more drastically, you may be taken to court. A former employer may file suit for a temporary restraining order, an injunction, and damages. If the noncompete situation is not resolved by the sending of cease and desist letters, then the employer must assess whether it will file a lawsuit to enforce the noncompete. Unlike most lawsuits, where the goal typically is to win a judgment awarding money damages after what is usually a lengthy process leading to trial, the goal in most noncompete situations is to obtain an immediate order from the court. This order is called a preliminary injunction (or in certain emergency situations a temporary restraining order). A preliminary injunction will order the former employee (and new employer) to stop taking certain actions, such as working for a competitor altogether, calling on certain customers for the new employer, or using or disclosing confidential and proprietary information. If the former employee or new employer violates the preliminary injunction, they are in contempt of court. The idea is that the preliminary injunction will stop the conduct, preserve the status quo between the parties, and prevent further harm to the former employer. A permanent injunction is issued after trial.

Obviously, the decision to file suit and seek a preliminary injunction must be evaluated carefully given the expense and uncertainty of litigation. This is particularly so in noncompete situations where the outcome of litigation is often influenced to a large degree by particular judges’ views on noncompetes generally. In order to obtain a preliminary injunction, the employer must establish that it is entitled to such relief by showing that: the employer is likely to prevail on the merits of the case at trial; the employer faces irreparable harm; the balance of harm (that facing the employer as compared with the harm the former employee could suffer by, for example, not being able to work for a particular new employer) favors the issuance of an injunction; and the public interest is not adversely affected by the issuance of a preliminary injunction.

In addition to assessing whether this standard can be met, the employer should pause to consider whether it will come to court with “clean hands” (that is, whether it has acted fairly). The issuance of a preliminary injunction is a matter squarely in the judge’s discretion and is a matter of equity (fairness), so it is important that the employer not overreach but rather only seek the protection necessary to prevent the misappropriation of goodwill, trade secrets, and confidential information. Similarly, before embarking on litigation, the employer should evaluate whether it has breached any obligation to the former employee (such as the obligation to pay salary or commissions). Such facts will influence whether the court will grant an injunction, and also will likely result in the assertion of counterclaims against the employer in the lawsuit.

The assessment of whether to file a lawsuit must be made quickly. Delay undermines the argument that the former employee’s current actions are actively harming the employer’s business, and may in rare cases result in the former employee filing suit to obtain a declaration from the court that the noncompete is unenforceable.

If an employer is trying to enforce a non compete against you, or if you are an employer looking to enforce a non compete against a former employee, let the experience Employment Law Group of Maya Murphy, P.C. in Westport, CT help you with this process. With decades of employment law experience in the courts of both Connecticut and New York, the employment law attorneys of Maya Murphy can surely meet your non compete needs. Call 203-222-MAYA or email Ask@mayalaw.com today to schedule a consultation!

Keywords: non compete agreement Connecticut, enforcing a non compete in connecticut, non compete westport, employment law attorney westport

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How to Defeat a Non-Compete in Connecticut

So you are locked into a non compete agreement, or are you? Here at Maya Murphy, P.C. in Westport, CT, or employment law attorneys have been enforcing and beating non competes for over a decade. With experience in both New York and Connecticut tribunals, our employment law group has seen it all when it comes to non competes. Below are just a few of the many ways are attorneys have poked holes in non compete agreements and freed our clients from their restraint.

1. Your new job may not violate the precise terms of your non-compete agreement: More often than you might believe, people do not carefully read over the precise words of their non-compete agreement, and don’t carefully consider whether it precludes their intended new job. This potential defense cannot be overlooked, and it often is. For example, in a recent Connecticut court decision, it was held that a lighting fixture employee who transferred to a competitor lighting fixture company did not violate his agreement because his new employer did not have a similar product line in the marketplace and it was unlikely any trade secrets he may know would not be put to use.

2. Too vague: Put simply, a non compete must be concise and clear. It must define exactly what is restricted and not cover “any restaurant in a 30 mile radius” or “all companies who sell light bulbs in America” or “any company that is in the business of selling food.” A court would find such restriction overly broad and void for vagueness.

3. Unclean Hands: In order for an employer to ask a Court to Order an employee to act in good faith and honorably, the employer, itself, must first be doing so. If the employee departed from the company because of extreme harassment or blatant discrimination, the employer’s non-compete enforcement efforts will likely fail. And, too, if the employer was engaged in illegal or dishonest conduct, in which the employee did not want to participate, non-compete efforts for this reason will also likely fail.

4. An employer must have a “legitimate business interest” to enforce a non-compete: The two recognized and accepted purposes of a non-compete agreement are (1) the protection of trade secrets, and (2) the protection of valuable business relations.

5. Overly broad restraint on time, geography or activities: Much like the vagueness discussed above, many non compete agreements are found void for being overly broad. In Connecticut, a non compete agreement must be legitimately related to a genuine business interest the employer has an interest in protecting and limited reasonably in time, duration, and scope. For instance, many courts find broad geographical limitations that fully restraint a persons employment opportunities void for being overly broad. Additionally, restrictions for more than 5 years are often found void for similar purposes.

6. Against Public Policy: Sometimes the effect of a non-compete violates a broader social purpose. For example, if your employer only gave non compete agreements to Hispanic employees or women of the company. The courts would always find these as a violation of public policy.

7. Fraudulent Inducement: It is what it sounds like, your employer lied to you about the non compete either before you signed it or before you left their employ. It usually occurs when an employer orally tells an employee they will not enforce the agreement after they leave or that the employee must sign the agreement on the onset or never receive a bonus of a raise. The court will see that the employer tried to trick you and void the non compete in those instances.

8. Contractual and Factual Defenses: A non-compete agreement is a contract and is always subject to many defenses such as: (a) mistake of fact; (b) unsigned document; (c) forgery; (d) material mistake in formation; (e) duress; (f) and illegality.

These are just some of the many ways to beat a non compete in Connecticut. If you are restricted by a non compete, or are about to be, consult the experience employment law attorneys of Maya Murphy, P.C. before you take your next step. Put experience on your side, call 203-222-MAYA or email Ask@mayalaw.com today!

Credit: Alan Sklover, skloverworkingwisdom blog

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