Comment on are non-compete provisions in employment agreements dead January 31, 2023

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on are non-compete provisions in employment agreements dead
January 31, 2023

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Comment on are non-compete provisions in employment agreements dead from article on January 17, 2023.
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Ken
            In Virginia, the courts almost never up hold an employment non-compete. If the existing employee takes customers, or any information concerning customers, that was obtained while in your employment, non-compete or no non-compete, they will find in the company's favor. The non-competes that are up held are almost always associated with the sale of the company and the person providing that non-compete must be compensated outside the purchase price.
Stan Corn
Alarms Inc

Response

            You are correct that courts are loathe to enforce non-compete provisions in employment contracts  You are also correct that an ex- employee has no right to abscond with or retain any ex-employer records.  Virginia is not alone in holding non-compete agreements to strict scrutiny and rarely enforcing the provision; most states have statutes or case law limiting when and to what extent a non-compete in an employment agreement will be enforced.  The courts justify denial of enforcement citing as reasons consequences to the ex-employee and benefits of competition to the public.
            But judges are not blind to the reality that sometimes restrictions on competitive employment are necessary to protect the interests of an employer.  This is particularly so when an employer has spent time and money investing in the training of an employee.
            I am not a Constitutional scholar but I don’t know how FTC can promulgate rules that affect employment contracts nationwide.  US Constitution, Article I, Section 10 states that, No state shall pass any law impairing the obligation of contracts. This includes the federal government and in any event FTC is not a legislative body.
            If non-compete provisions are rendered unenforceable [which as I understand it is pretty much the case in California] we need to come up with other measures to protect against employees taking advantage of training and introductions to customers, vendors, referral sources, business models and other things that a business owner generally considers proprietary and confidential [and worth protecting].  Deferring bonus or other perks or requiring employees to pay for training with forgivable loans are some ideas we can consider.
Be sure all your employees have signed a K&K Employment Agreement.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com