Posts tagged with "#MayaMurphy"

Labor & Employment Law – What to consider after losing your job

So you’ve lost your job.  Now what?  Depending on the circumstances, there are several legal issues to explore before moving on with your career.  Here is a basic summary of five issues to consider:

First:

File for unemployment as soon as possible so you don’t miss any deadlines.  There is no guarantee that you will be eligible for unemployment benefits but it doesn’t hurt to try.  You may be eligible for unemployment benefits depending upon the circumstances surrounding your job loss and whether you receive any compensation as severance on the way out the door.

Second:

Consider whether you have a contract with your former employer, either individually or through a union.  Today, at will employment is very common.  Generally, employers and employees each have the option to terminate the employment relationship at any time for any reason or for no reason at all.  However, an employee may have the right to enforce a contract if his or her employer failed to uphold the agreed upon terms of employment.  The provisions of a written contract are more likely to be enforceable but even an oral promise may have legal ramifications.

Third:

Make sure you are fully paid by your employer.  It is not unusual for an employer to fail to pay wages or to withhold a commission payment to a former employee.  Employers may face stiff penalties for neglecting to make these payments.  An employee may have several options to pursue a claim through the state or the court system.

Fourth:

Check to see if your former employer has any written policies or an employment handbook that may apply to you.  While the terms of a policy or handbook provision may not be legally enforceable against your employer, it doesn’t hurt to bring the relevant provision to the attention of your employer to see if they will honor it.  An example of a relevant provision would be a severance policy guaranteeing separation pay based upon years of service.

Fifth:

Verify what happens to your employment benefits now that you’ve lost your job.  Health insurance is the most common benefit to consider here.  Make sure to confirm when your employer will stop providing benefits.  Also, consider whether you want to continue any benefits through an individual plan.  You may be eligible for continued medical and dental benefits through The Consolidated Omnibus Budget Reconciliation Act (“COBRA”) as well.

This five-point list is not meant to cover all the possible issues that may arise when you lose your job but it is a starting point.  Under some circumstances, more complicated matters concerning deferred compensation, employment discrimination and whistleblower claims must be considered.  If you have any questions about your rights, please consult with an attorney.

 

U.S. Supreme Court Decides on Restrictive Interpretation of Required Causation for Title VII Employer Retaliation, Circumventing Congressional Amendment

University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ___ (2013)

The United States Supreme Court decided two very closely watched employment law cases interpreting employer discrimination under Title VII of the 1964 Civil Rights Act.  This second case, University of Texas Southwestern Medical Center v. Nassar, like the former was decided 5-4 in favor of the employer’s interpretation.[1]  In Nassar, the Court held that the appropriate standard of causation for proving retaliation in violation of Title VII of the 1964 Civil Rights Act was “but-for-causation,” rather than the more lenient “motivating factor” burden of Congress’s 1991 Civil Right Act amendment.

Case Details

The petitioner and employer was a University of Texas medical center specializing in medical education. The university had an affiliation agreement with Parkland Memorial Hospital, which requires the Hospital to offer vacant staff physician posts to University faculty members. The respondent, Mr. Nassar, a physician of Middle Eastern descent, was a University faculty member and a Hospital staff physician.  Nassar claimed that Dr. Levine, one of his supervisors at the University, was biased against him on account of his religion and ethnic heritage.[2] 

On different occasions Nassar complained to Dr. Fitz, Levine’s supervisor about alleged ethnic and religious harassment.  Nassar arranged to continue working at the Hospital without also being on the University’s faculty.[3]  When Nassar resigned his teaching post, he sent a letter to Fitz and others, stating that his reason for leaving was because of Levine’s harassment, “religious, racial and cultural bias against Arabs and Muslims.[4]

Upset at Levine’s public humiliation and wanting public exoneration for her, Fitz objected to the hospital’s job offer to Nassar, which the hospital then withdrew.  Nassar claimed that Fitz’s efforts to prevent the Hospital from hiring him were in retaliation for complaining about Levine’s harassment, in violation of §2000e–3(a), which prohibits employer retaliation “because [an employee] has opposed . . . an unlawful employment practice . . . or . . . made a [Title VII] charge.”

Title VII of the Civil Rights Act

Title VII of the 1964 Civil Rights Act, 42 U. S. C. §2000e et seq., manifests the federal policy to prohibit unlawful employment discrimination and retaliation by employers, providing remedies to employees for injuries related to discriminatory conduct by employers.  Title VII prohibits multiple categories of wrongful employer conduct, the most common being status-based discrimination, which is employer discrimination on the basis of race, color, religion, sex, or national origin, in hiring, firing, salary structure, promotion and the like.[5] 

To ensure the effective enforcement of the statute, Title VII also prohibits an employer from retaliating against a worker for complaining about employment discrimination (for example, by filing a complaint with the Equal Employment Opportunity Commission (EEOC), the agency that enforces Title VII).[6]

In general, when the law grants persons the right to compensation for injury from wrongful conduct, there must be some demonstrated connection or linkage, between the injury sustained and the wrong alleged.[7] The requisite relation between prohibited conduct and compensable injury is governed by the principles of causation. At issue in Nassar was the proper standard of causation the Court should apply in the context of an employee’s Title VII claim of employer retaliation.

Motivating Factor Burden

Title VII of the 1964 Civil Rights Act has been characterized by a back-and-forth between the Court and Congress, with Congress overruling a number of the Court’s restrictive interpretations of the statute in the past.  In Price Waterhouse v. Hopkins, 490 U. S. 228, the Supreme Court construed Title VII to require employees to prove that the status-based discrimination was the “but for” cause of the employee’s termination, failure to be hired, etc.  As a result, even if the employer admitted that race was one of the reasons for refusing to hire the worker, the worker could still lose if the jury believed that the employer would not have hired the worker anyway.

In response to this onerous standard, Congress enacted the Civil Rights Act of 1991, amending Title VII by replacing this standard with the motivating factor burden.  Congress added a new subsection to §2000e–2, providing that “an unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex, or national origin was a motivating factor for any employment practice, even though other factors also motivated the practice.”[8] 

Therefore, to prove employer discrimination, the employee is only required to show that the motive to discriminate was one of the employer’s motives, even if the employer also had other, lawful motives for the decision.

The question before the Court in Nassar was whether the more lenient motivating factor burden also applies to claims of employer retaliation under §2000e–3(a), rather than the more onerous “but-for-causation” standard.

But-For-Causation Standard

A Court ruling for the university imposing a “but-for-causation” standard for Title VII retaliation claims would likely make it more difficult for victims of retaliation under Title VII to sue their employers, whereas a “motivating factor” standard could raise the number of frivolous claims filed, increasing the costs borne by employers in defending against potentially meritless litigation and contra the Court’s interest in preserving judicial economy.

The Supreme Court held that employee Title VII retaliation claims must be proved according to traditional principles of but-for causation, not the lessened causation test stated in §2000e–2(m).[9]

The decision was based on a close parsing of the statutory text and structure.  Writing for a five-Justice majority, Justice Kennedy explained that the “motivating factor” provision only applies to claims of “discrimination” under Title VII, meaning discrimination based on race, sex, and religion, rather than retaliation.

Anti-Retaliation Provision

Instead, Title VII’s anti-retaliation provision, §2000e–3(a), appears in a different section and uses considerably similar language to a related statute, the Age Discrimination in Employment Act of 1967 (ADEA).[10] §2000e–3(a) makes it unlawful for an employer to take adverse employment action against an employee “because of” certain criteria. In Gross v. FBL Financial Services, Inc., 557 U. S. 167 (2009), the Court, interpreting similar language, concluded that the ADEA requires proof that the prohibited criterion was the but-for cause of the prohibited conduct.

Justice Kennedy determined, “Given the lack of any meaningful textual difference between §2000e–3(a) and §623(a)(1), the proper conclusion is that Title VII retaliation claims require proof that the desire to retaliate was the but-for cause of the challenged employment action.”[11]

Justice Ginsburg, joined by the other three liberal Justices, strongly dissented. Justice Ginsburg took the unusual step of reading a summary of her dissent from the bench.  She argued that the Court had previously considered retaliation as a form of “discrimination,” and that the majority was ignoring the reasonable interpretation of the EEOC and the underlying purposes of the “motivating factor” amendment.  As she did in Vance, Justice Ginsburg ended her dissent calling for Congress to overturn the decision.

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County. Should you have any questions about Title VII and workplace discrimination or any other employment law matter, please do not hesitate to contact Attorney Joseph C. Maya, Esq. He may be reached at Maya Murphy, P.C., 266 Post Road East, Westport, Connecticut, by telephone at (203) 221-3100, or by email at JMaya@mayalaw.com.


[1] University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ___ (2013).

[2] Id. at ­­­­­__.

[3] Id. at ­­­­­__.

[4] 42 U. S. C. §2000e-3(a)

[5] 42 U. S. C. §2000e-2(a)

[6] 42 U. S. C. §2000e-3(a)

[7] University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ___ (2013).

[8] 42 U. S. C. §2000e–2(m)

[9] University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ___ (2013).

[10] 29 U. S. C. §623.

[11] University of Texas Southwestern Medical Center v. Nassar, 570 U.S. ___ (2013).

US Supreme Court Establishes Employer Friendly Definition of “Supervisor” for Employer Liability for Title VII Employment Discrimination

Vance v. Ball State University, 520 U.S. ___ (2013)

The United States Supreme Court decided two very closely watched employment law cases interpreting harassment and discrimination under Title VII of the 1964 Civil Rights Act.  The first case decided 5-4 in favor of the employer, Vane v. Ball State University [1], addressed a question left open by two previous Supreme Court cases[2], who qualifies as a “supervisor” so as to hold an employer vicariously liability under Title VII for an employee’s unlawful harassment or discrimination?

Case #1

In this case, Maetta Vance, an African-American woman, was employed as a full-time catering assistant with Ball State University.  She initially filed internal complaints with BSU and charges with the Equal Employment Opportunity Commission (EEOC), alleging racial harassment and discrimination by a fellow employee, Davis, a white woman and catering specialist employed in the same division as Vance.

The situation persisted causing Vance to file a lawsuit in 2006 claiming that she had been subjected to a racially hostile work environment in violation of Title VII.  While the parties agreed that Davis did not have the authority to fire, hire, promote, or transfer Vance, in her capacity as a lead caterer, Davis controlled the day to day duties of Vance.  In her complaint, she alleged that Davis was her supervisor and that BSU was liable for Davis’ creation of a racially hostile work environment.

The plaintiff, Vance, argued that argued that a person is a “supervisor” if she has authority to control someone else’s daily activities and evaluate performance.  The employer argued that a “supervisor” must have more power, such as the ability to take a tangible actions including: “hiring, firing, demoting, promoting, transferring or disciplining” the employee.[3]

Under Title VII of the Civil Rights Act, an employer’s liability for harassment and discrimination depends on the status of the harasser. If the harassing employee is the victim’s co-worker, the employer is liable only if it was negligent in controlling working conditions.[4]  However, if the harassing employee is the victim’s supervisor different rules apply.

Case #2

In two companion case from 1998, Burlington Industries, Inc. v. Ellerth and Faragher v. Boca Raton, the Supreme Court held that an employer is strictly liable under Title VII for discrimination or harassment by an employee who is a “supervisor” where the harassment amounts to tangible employment actions.

Where there is no adverse employment action, the employer is still vicariously liable for the supervisor’s hostile work environment unless the employer can establish as an affirmative defense that (1) the employer exercised reasonable care to prevent and correct any harassing behavior and (2) that the plaintiff unreasonably failed to take advantage of the preventive or corrective opportunities that the employer provided.[5]  Under this framework, therefore, it matters whether the harasser is a “supervisor” or simply a co-worker.

Writing for a five-to-four majority, Justice Alito’s opinion adopted the rule proposed by the employer, holding that for purposes of this Title VII rule, to be a “supervisor,” a person must have the power to take a “tangible employment action” against the victim.[6]

That is, he must be able to “effect a ‘significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”[7]  The employer was entitled to win the case because Vance had not adequately shown that the person who discriminated against her was a supervisor under the Court’s definition.

Takeaway 

Thus, for the purposes of Title VII of the Civil Rights Act, “an employer may be vicariously liable for an employee’s unlawful harassment only when the employer has empowered that employee to take tangible employment actions against the victim,” such as significant change in employment status, responsibilities, or changes in benefits.[8]

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County. Should you have any questions about Title VII and workplace discrimination or any other employment law matter, please do not hesitate to contact Attorney Joseph C. Maya, Esq. He may be reached at Maya Murphy, P.C., 266 Post Road East, Westport, Connecticut, by telephone at (203) 221-3100, or by email at JMaya@mayalaw.com.


[1] Vance v. Ball State University, 520 U.S. ___ (2013)

[2] Burlington Industries, Inc. v. Ellerth 524 U. S. 742 (1998), Faragher v. Boca Raton, 524 U. S. 775 (1998),

[3] 2008 WL 4247836, *12 (quoting Hall v. Bodine Elect. Co., 276 F. 3d 345, 355 (CA7 2002)

[4] Vance v. Ball State University, 520 U.S. ___ (2013)

[5] Faragher, at 807; Ellerth, at 765.

[6] Vance v. Ball State University, 520 U.S. ___ (2013)

[7] Vance v. Ball State University, 520 U.S. ___ (2013); Ellerth, 524 U.S. at 761

[8] Vance v. Ball State University, 520 U.S. ___ (2013)

Mere Inclusion of a Restrictive Covenant Does Not Invalidate Entire Contract

Wes-Garde Components Group, Inc. v. Carling Technologies, Inc., 2012 Conn. Super. LEXIS 899

Wes-Garde Components Group, Inc. (“Wes-Garde”) and Carling Technologies, Inc. (“Carling”) executed an agreement on December 31, 1979, wherein Wes-Garde would receive “permanent favorable pricing” on certain electrical components manufactured by Carling, contingent upon maintaining annual threshold purchasing levels.  The contract was amended on January 1, 1988, and it stayed in effect until 2008.  The agreement between the two companies contained a covenant not to compete where Carling specifically agreed to refrain from entering the distribution market for certain electrical components.

Motion for Summary Judgement

Carling informed Wes-Garde on June 19, 2008 that it considered the agreement unenforceable and as such the company was under no contractual obligation to provide favorable pricing or abide by the non-compete provisions.  December 1, 2008 marked the first date that Carling actually failed to provide favorable pricing, per the contract, while transacting with Wes-Garde.  Wes-Garde ultimately sued Carling and requested that the court enforce the agreement.  Carling moved for summary judgment on the grounds that the whole contract was unenforceable because it contained an “unreasonable restraint of trade” in the form of a mutual covenant not to compete.

The Superior Court in the Judicial District of Hartford denied Carling’s motion for summary judgment and unequivocally rejected the argument that the mere inclusion of the mutual non-compete agreement necessitated the invalidation of an entire contract willingly executed by the parties.  The details of a specific non-compete agreement may render that portion of the contract unenforceable but there is not a principle under Connecticut law espousing the idea that the mere presence of a restrictive covenant invalidates an entire agreement.

The Court’s Decision

Wes-Garde opposed the motion for summary judgment on procedural grounds due to Carling’s failure to specify the ground on which it moved or make a specific reference to the covenant not to compete.  Carling’s pleading did not establish specific facts or allegations regarding the non-compete agreement nor did they identify it as the grounds for moving for summary judgment.

Carling failed to provide the court with the necessary information and the opportunity to evaluate the non-compete agreement based on its particular provisions.  The court could have ruled on the enforceability of the non-compete agreement had Carling introduced specific facts or pleadings regarding those contractual provisions.

Carling’s defense, where a party alleges that the inclusion of a covenant not to compete invalidates a whole agreement, is universally rejected by courts in Connecticut and cannot be successfully argued as an avenue to render an entire agreement unenforceable.


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

Court Enforces Non-Compete Agreements Connected to Franchise Agreements

Carvel Corporation v. DePaola, 2001 Conn. Super. LEXIS 1190

Carvel Corporation sells retail manufacturing licenses and related goods/services to franchises that operate Carvel ice cream stores.  Misters Leopold and David DePaola operated two such Carvel stores in Waterbury, Connecticut.  The two men contracted with Carvel on November 1, 1990, to obtain a retail manufacturer’s license for Carvel franchise store # 1578 for a period of ten years.  The parties entered into non-compete and trade secrets agreements on March 22, 1991.

Later that year, on September 11, 1997, the DePaolas entered into an agreement for a license for Carvel franchise store # 2704.  Several restrictive covenants accompanied this second franchise agreement.  The DePaolas were prohibited from operating ice cream stores within two miles of their previous Carvel locations for a period of three years following the abandonment or expiration of each respective license agreement.  Additionally, the covenants stated that legal disputes would be “interpreted, governed, and construed pursuant to New York law”.

On October 31, 2000 the first license agreement expired but Carvel alleged that the DePaolas continued to operate that location as an independent ice cream store.  The company learned a few weeks later that the DePaolas had begun to operate the second location in the same manner, as an independent ice cream store not classified as a Carvel franchise.  Carvel Corp. sued the DePaolas for breach of the restrictive covenants and specifically claimed that they would disclose valuable and proprietary trade secrets during their current and future business activities.

Injunction Request

Carvel requested that the court issue two injunctions: one to order the DePaolas to cease using and to return any and all Carvel property and a second to cease the operation of their independent ice cream stores in order to comply with the non-compete agreements.  The DePaolas were compliant with returning Carvel property but took issue with the company’s request that they cease their operations of the two ice cream stores.  The agreement had a choice of law provision designating New York law as controlling, but the Superior Court of Connecticut sitting in New Britain was able to adjudicate the case because of the similarities in New York and Connecticut laws’ treatment of non-compete and other employment agreements.

The Court’s Findings

The court found in favor of Carvel Corporation and ordered that the DePaolas cease their operations of their two independent ice cream stores in Waterbury, CT in order to comply with the non-compete agreement.  To reach its decision regarding the enforceability of the underlying employment contract between the parties, the court analyzed whether Carvel had a legitimate business interest that warranted protection, the degree to which the restrictions were reasonable, and to what extent the restrictions would make the DePaolas bear occupational hardships.

The court held that Carvel did have a legitimate business interest that was threatened by the DePaolas’ continued business activities.  While the company did not exercise physical control or have a leasehold interest over the stores, the company had an interest in its goodwill and name recognition that was connected to the customers of the DePaolas’ ice cream stores.

Reasonable Restrictions

Next, the court held that the restrictions, both time and geographical, were reasonable in scope and enforceable by an injunction.  The stated purpose of the restrictions was to “prevent dilution of the exclusivity of the valuable Carvel know-how and Carvel trade secrets”.  The restrictions enumerated in the non-compete agreement were firm enough to protect Carvel’s legitimate interest but limited enough so as not to unnecessary restrict the DePaolas’ economic activities.

The DePaolas claimed that should an injunction be issued, they would “lose both their income and their investment” because the “hardships would be immediate, devastating, and irreparable”.  The court rejected this argument however and held that the DePaolas had entered into the agreements on their own accord without coercion and as such were responsible to bear the risk of hardships that may be the product of the agreements’ terms.

In light of a legitimate business interest and reasonable restrictions, the court granted Carvel’s request for an injunction restraining the DePaolas’ actions in order to prevent further violations of the legally binding non-compete agreements.

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

Relief For a Non-Compete Breach

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.

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 call our office at (203) 221-3100. We offer free consultations to all new clients.

Violations of a Restrictive Covenant

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.

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 call our office at (203) 221-3100. We offer free consultations to all new clients.

Enforcement of a Non-Compete

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.”

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 call our office at (203) 221-3100. We offer free consultations to all new clients.

Applying Basic Contract Principles to the Enforcement of a Non-Compete Agreement

North American Outdoor Products, Inc. v. Dawson, 2004 Conn. Super. LEXIS 2677

North American Outdoor Products, Inc. (NAOP) was a company created to facilitate the sales of outdoor goods to mass retail merchants.  The company marketed products such as instant garages, sporting goods, shelters, and canopies.  Mr. Curt Dawson worked for NAOP in its sales and marketing department from February 1999 to April 2, 2004.  He worked as the National Sales Manager for a period of time in Florida but returned to work in Connecticut when NAOP agreed in a January 2003 meeting to an annual raise of $25,000.00 and related moving expenses. In March 2003, management requested that Mr. Dawson sign an Employment Agreement that contained and explained several restrictive covenants that would become effective upon termination.

The Non-Compete Agreement

The agreement prohibited him from competing with NAOP for twelve months following termination as well as soliciting any entity that NAOP had transacted with in the three-year period prior to termination.  Mr. Dawson signed and returned the employment and non-compete agreement on March 26, 2003 but a representative for the company did not sign the document at that time.  A representative for NAOP only signed the document on March 20, 2004 when the company learned of Mr. Dawson’s intent to voluntarily terminate his employment.

NAOP brought legal action against Mr. Dawson and sought an injunctive order from the court to enforce the provisions of the non-compete agreement.  Mr. Dawson however presented multiple defenses as to why the restrictive covenants were unenforceable: 1) lack of consideration, 2) unreasonable time and geographical restrictions, 3) unclean hands on the part of NAOP, and 4) lack of necessary signatures.  The court found in favor of Mr. Dawson, held that the non-compete agreement was unenforceable, and denied NAOP’s request for injunctive relief.

Adequate Consideration

Under Connecticut law, a non-compete agreement must have sufficient consideration to make the document legally binding upon the parties.  For enforcement of a restrictive covenant, the employee must receive something in exchange for his or her covenant.  The agreement at hand did not bestow any new benefit upon Mr. Dawson and stated that his continued employment was the consideration for the agreement.

Connecticut courts have concluded however that “continued employment is not [sufficient] consideration for a covenant not to compete entered into after the beginning of the employment”.  NAOP claimed that the raise and moving expenses promised in January 2003 demonstrated adequate consideration but the court rejected this notion because those promises bore no substantial connection to the written agreement from March 2003.

The Court’s Decision

Furthermore, the court concluded that the covenant not to complete was unenforceable because of inherent ambiguities in its language.  Courts cannot create a binding contract in the absence of a meeting of the minds between the parties.  The plaintiff, in this case NAOP, bears the burden of proof with respect to demonstrating a meeting of the minds in order to prove its version/interpretation of the alleged contract.  The court looked to the plain language of the agreement to ascertain whether it articulated clear and concise provisions that led to a meeting of the minds between Mr. Dawson and NAOP.

The court concluded that the agreement was unclear about material details, namely the effective date of the provisions and the identification of the specific parties.  The agreement was a bilateral document that required signatures of both parties in order to be complete and become legally binding.  The absence of NAOP’s signature at the same time as Mr. Dawson’s thus rendered the agreement unenforceable.


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

Does Termination of Employment Effect My Non-Compete?

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 don’t hesitate to call our office at (203) 221-3100. We offer free consultations to all new clients.