Posts tagged with "employment lawyer Westport"

Enforcing a Non-Compete in Connecticut

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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 nowadays, 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.

Cease and Desist

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 non-compete, 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 non-compete (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 non-compete 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 non-compete 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 non-compete situations are resolved by settlement following the exchange of the cease and desist letter and response.

Going to Court

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 non-compete 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 non-compete. 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 non-compete 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.

Seeking a Preliminary Injunction

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 non-compete situations where the outcome of litigation is often influenced to a large degree by particular judges’ views on non-competes 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.

Considerations to Make Before Filing a Lawsuit

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 non-compete is unenforceable.

Credit: Mbbp.com, Robert Shea, Scott Connolly

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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.

If you have any questions regarding employment law matters, do not hesitate to contact Joseph Maya and the other experienced attorneys of Maya Murphy at (203) 221-3100 or Ask@mayalaw.com to schedule a consultation today.

Can an Employee Who Waived Discrimination Claims in a Severance Agreement Still Sue for Discrimination?

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If an employee who signed an agreement waiving discrimination claims later files a lawsuit asserting such claims, he or she will argue that the waiver is legally invalid while the employer will, of course, argue the opposite.  A court, therefore, would have to determine whether the waiver is valid and binding on the employee before considering the substance of the underlying discrimination action.

A waiver in a severance agreement generally is valid if the employee knowingly and voluntarily consented to it.  Courts look to different factors to determine whether the consent was knowing and voluntary, and this could depend upon the statute under which the discrimination action is brought.  While some courts rely on traditional contract interpretation principles and focus on whether the language of the waiver was clear, most courts will look at a number of factors, or what is referred to as “the totality of the circumstances,” to determine if the employee knowingly and voluntarily waived his or her right to bring a lawsuit.

Analyzing Waivers in Employment Agreements

When an employee asserts claims under Title VII of the Civil Rights Act, the Americans with Disabilities Act, or the Equal Pay Act, courts considering the totality of circumstances will look to:

  • Whether the waiver was clear, specific (e.g., explicitly referred to the types of claims being waived), and written in a way that the employee could understand given his or her education and experience;
  • Whether the waiver was induced by fraud, duress, undue influence, or other improper conduct by the employer;
  • Whether the employee had enough time to consider the waiver and the advantages or disadvantages of signing it;
  • Whether the employee consulted an attorney or was encouraged or discouraged from doing so by the employer;
  • Whether the employee had input in negotiating the terms of the agreement; and
  • Whether the employer offered the employee consideration, such as additional pay or benefits, beyond what the employee was already entitled to by law or under a contract, and the employee accepted this consideration.
Lawsuits Under ADEA

When an employee brings a lawsuit under the Age Discrimination in Employment Act (“ADEA”), courts will look to additional factors under this statute to determine whether the waiver was knowing and voluntary.  For example, the waiver for an ADEA claim must specifically refer to rights or claims arising under the ADEA, must advise the employee to consult with an attorney, must provide the employee with at least 21 days to consider the offer and a further seven days to revoke his or her signature, and the waiver may not include any rights or claims that arise after the date the waiver is signed.

Accordingly, if some or all of the factors listed above are not met, an employer may still face exposure to a discrimination lawsuit – although it appeared that the company was insulated from due to a waiver signed by its former employee.

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Do you need an employment law attorney? Look no further than to the nearly two decades of employment law experience at Maya Murphy. Our lawyers have practiced in the courts of Connecticut and New York on countless employment law issues and can help you with any employment law matter. Contact Joseph Maya at 203-221-3100 or by email at JMaya@MayaLaw.com for a free consultation today!

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.

How Do I Negotiate a Severance Package in Connecticut?

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During these tough economic times, layoffs have become increasingly frequent. Unfortunately, employees of all experience levels are left with no job and face a bare economy.  At a time like this, most employees may think accepting a severance package is the 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.

Before you attempt negotiations, you should first understand that there is no statutory minimum amount of time an employee must be given to consider the severance agreement.  A prevalent misconception is that all employees are entitled to 21 days to review a severance package offer.  Unless the package is offered to an employee over the age of forty, however, there is no specific review period defined by law.

Steps to Take Before Accepting, Negotiating, or Rejecting a Severance Package

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 bonuses, 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.

Consideration, in the context of severance packages, means that an employee must receive something of value in exchange for giving up certain rights.  This “something of value” must be something other than what the employee is already entitled to.  Often, this comes in the form of additional pay or prolonged benefits.

Because the employee is receiving consideration, most severance agreements contain a release of a variety of legal claims against the employer.  This typically involves a release of all claims against the former employer that are based on age, race, national origin, gender, disability, and religion. These are critical rights all employees are granted under the ADEA, Americans with Disabilities Act, Employee Retirement Income Security Act, and Title VII of the Civil Rights Act.

Negotiating a Severance Package

When negotiating, it is important to keep the above facts in mind, but also that most employers are willing to negotiate severance on some level.  While it seems like the package is a “take it or leave it” deal, most employers are open to reasonable requests in negotiation.  There is always a risk that an employer will revoke the offer if any negotiations are attempted, but 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 should not focus solely on the dollar amount connected with the severance agreement.  Employers might be willing to extend insurance coverage, disability benefits, or other items in lieu of an increase in dollar amount.

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Given the breadth of the claims released and the intricacies of most severance packages, it is extremely important to consult with an attorney before signing. 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 Joseph Maya and the other experienced attorneys by phone at (203) 221-3100 or via e-mail at Ask@Mayalaw.com.

Can an Employee Sue for Wrongful Discharge Even Though the Employee Did Not Have an Employment Contract?

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In Connecticut, employees who do not have a contract spelling out the duration of their employment are considered “at-will” employees.  In an at-will employment relationship, either party (the employer or the employee) may terminate the employment whenever they choose, for any reason or no reason at all.  Of course, both federal and state laws protect employees from discrimination, including termination, based on gender, race, age, religion, national origin, disability, and sexual orientation, among other things.

However, in limited circumstances, an at-will employee may be able to sue his or her employer for wrongful discharge even without a case of discrimination if the discharge is against public policy, or if the employee can prove that there was an implied employment contract.

The Public Policy Exception

Under the public policy exception, an employee can bring an action for wrongful termination if his or her discharge is contrary to a clear public policy, and the court (rather than a jury) must determine at the outset whether an important public policy is at issue in the case.  Such public policy may be found in constitutional provisions, statutes or in judicially conceived notions.  These would include prohibitions against firing an employee for filing a claim for unemployment benefits, filing a wage enforcement claim, and exercising federal or state constitutional rights, such as religious or free speech rights.

Although courts construe this exception narrowly, some have, for example, held that an employee may maintain an action for wrongful discharge where the plaintiff alleged that he was fired for refusing to participate in a scheme to defraud the government in violation of a federal statute, or was fired for reporting that a supervisor had sold alcohol to a minor in violation of a state statue.

Wrongful Termination

Connecticut courts also recognize a cause of action for wrongful termination based on an implied employment contract.  To prevail on such a claim, the employee must prove that the employer agreed, through words or actions, not to terminate the employee without just cause.  This exception, too, is narrowly construed.  Such claims have arisen where an employee manual was distributed to the now discharged employee that contained language concerning job security (e.g., that the employee could not be discharged without just cause) that he or she relied upon in deciding to remain with his employer.

If you believe you have been wrongfully terminated, contact one of the experienced employment law attorneys at Maya Murphy, P.C. to discuss your legal remedies today.  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 to schedule a free initial consultation.

How to Defeat a Non-Compete in Connecticut

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So you are locked into a non-compete agreement, or are you? Here at Maya Murphy, P.C. in Westport, CT, our 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 our 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 competing 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. No legitimate business interest to protect:

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 Joseph Maya and the other experienced employment law attorneys of Maya Murphy, P.C. before you take your next step. Put experience on your side, call 203-221-3100 or email Ask@mayalaw.com today!

Credit: Alan Sklover, skloverworkingwisdom blog

Non-Compete Agreements: A Hot Stove of Debate

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Massachusetts Governor Deval Patrick recently announced that he is proposing legislation to abolish non-compete agreements. This announcement re-ignited a debate in the Massachusetts community regarding non-compete agreements. In general, more established companies, particularly those in the technology arena, view non-competes as a favorable way of protecting intellectual property and maintaining a competitive edge by preventing former employees from unfairly competing and/or sharing business secrets. In contrast, start-up companies (and some venture capitalists) generally view non-competes as stifling innovation and job growth.

There are only a few states that have banned non-compete agreements in the union, California being one of them. Many point to California’s booming Silicon Valley to show the effectiveness of such unenforceability. With Massachusetts attempting to follow in California’s footsteps, the non-compete argument has heated up in Connecticut as well. Just last year, the Connecticut General Assembly passed a bill restricting the use of non compete agreements only to have it vetoed by Governor Malloy. When speaking on why he vetoed the bill the Governor had the following to say:

“The bill left certain key terms undefined or unclear.” “As a result” he added, “this bill has the potential to produce legal uncertainty and ambiguity in the event of a merger or acquisition. If signed into law, costly and time-consuming litigation would likely be required to provide necessary clarity.” So its back to the drawing board for Connecticut, but maybe they can take notes from how Massachusetts handles the issue later in the year.

What is a non-compete agreement?

By way of background, and in the rare event you have never encountered a non-compete agreement, a typical non-compete agreement involves a company requiring an employee to contractually agree that, if the employee should leave his or her employment with the company, the employee will not work for a competitor within a certain geographic range of the employer for a certain period of time. Non-compete agreements are commonly signed at the beginning of an employment relationship, as a condition of employment, but may be signed during the course of an employment relationship under appropriate circumstances.

Effect of Non-Competes on Employees

The most important thing to know about non-compete agreements is how they affect you in the event of your termination or resignation from your current employer. All too often, these agreements are signed, yet misunderstood by the employee. A non-compete can change your circumstances more than you think; the agreements limit where you can work, when you can work, and who you can work for. For many individuals, a non-compete may restrict their entire job pool and leave them with little to no opportunities close to home. For these reasons, it is essential to speak with an experienced employment law attorney before you sign a non compete agreement as a condition of employment.

The attorneys of Maya Murphy, P.C. have been practicing employment law for more than a decade in the tribunals of New York and Connecticut. If you have any questions regarding employment agreements, please do not hesitate to contact Joseph Maya and the other experienced attorneys at 203-221-3100 or JMaya@Mayalaw.com to schedule a free initial consultation.

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.