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What’s the Difference between ‘Right-to-work’ Laws and Restrictive Covenant Enforcement?
October 16, 2018
What’s the Difference between ‘Right-to-work’ Laws and Restrictive Covenant Enforcement? 
    I had two alarm companies engage me to send cease and desist letters to their former employees. In one case I followed up with a lawsuit in which the offending former employee and new employer agreed to settle, agree to abide by the restrictive covenant in the ex-employee's Employment Agreement and pay our client's legal fees.
    In the other matter the ex-employee claimed he didn't have to abide by the restrictive covenant in his former Employment Agreement because he was in a "right to work" state and therefore the restrictive covenant was not enforceable.
    Don't confuse a right to work state with a state that won't enforce a restrictive covenant. I had one of our employment law attorneys, Jonathan Rogoff,Esq., prepare a memo on the issue, and here it is:
    In the U.S., ‘right-to-work’ laws pertain to labor unions and workers at a company. Specifically, the right-to-work means that employees are entitled to work in unionized workplaces without actually joining the union or paying regular union dues. They may also cancel their union membership at any time, without losing their jobs. But they are still entitled to fair and equal union representation if they are part of a "bargaining unit" at the company—that is, a group of employees who have similar work duties, share a workplace, and have similar interests when it comes to wages, hours, and working conditions.
    In other words, right-to-work laws essentially require unionized workplaces to become "open shops," where union membership is optional, in contrast to the traditional "closed shop," in which union membership is mandatory. While regular dues are not taken out of their paychecks, the right-to-work (nonunion) employees are still covered by the union; however, they might have to pay for the cost of the union representing them in specific ways, such as pursuing grievances on their behalf.
Although it sounds similar, the right-to-work principle is not the same as employment at will, which means an employee can be terminated at any time without any reason, explanation, or warning; nor is it a guarantee of work or ruling that an employee is entitled to work.
    As of 2018, 27 states have adopted right-to-work laws: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming. 
    ‘Right to work’ laws and enforceability of restrictive covenant provisions in employment contracts are unrelated. Many employers utilize employment contracts which contain restrictive covenants in order to protect their legitimate interests in their customers and proprietary business information. Restrictive covenants in employment contracts are considered to be in partial restraint of trade and will be upheld if strictly limited: as to time; as to territorial effect, and are otherwise reasonable, considering the scope of the employer's business interest sought to be protected and the effect on the employee.
    This three-element test has been described by the courts as a "helpful tool" in examining the reasonableness of the covenants being evaluated. The judge, rather than the jury, applies this test and determines whether the restraints are reasonable.
    "Covenants not to compete" or "non-competes" are the most common types of restrictive covenant in employment agreements.     These provisions preclude the employee from competing with the employer and/or from working for a competitor of the employer for a period of time after the termination of employment.
The bottom line is that even if the employee is located in a ‘right-to-work’ state, those laws relate to the employee working in a unionized workplace without paying union dues, and do not allow the employee to breach the restrictive covenant provision, as long as the provision satisfies the three-element test described above.
Employers must carefully craft employment contracts which contain non-compete, non-solicit, and non-disclosure provisions if the employer ever tends to legally enforce the agreement. Employers that elect to include broad restrictive language in employment contracts are likely to receive a hostile reception in the courts. 
    We include confidentiality provisions, restrictive covenants and lots more in our Employment Agreement and our employer Handbook. You should be using these forms. If you're in NY you need the sexual harassment training also.

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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
516 747 6700