An Undeclared War – The Death of Employment At Will
I was rather stunned today by the data reported by Gruntled Employees, a blog site that seems to be focused on the successful representation of employers. The data suggested that litigation brought by employers to enforce non-compete clauses was becoming so common that the incidence of such cases was exceeding the incidence of Sarbanes – Oxley cases, the cases complained about most vociferously by lobbyists to Congress. Indeed, the data indicated the incidence of these types of cases reported in the legal literature has literally doubled in the last decade.
Employers, according to the Gruntled Employees article, claim this type of litigation is necessary to protect trade secrets. That may be the party line employers use. But, as an apologetic it is simply bogus.
Most of the cases do not involve the types of employees that know trade secrets. They are typically not engineers or processing personnel. They are typically not corporate decisionmakers. Indeed, almost always, they are sales personnel of one type or another that have significant client contacts, sometimes have a title, but are not usually actual corporate officers. The client contacts range from client contacts given to the employee by the employer to client contacts developed solely by the employee for the employer. Some of the client contacts were developed when the employer was salaried but just as many client contact cases involve commission only sales personnel. The result of this collage of fact patterns is the inescapable conclusion that these types of cases are brought for one reason only in most cases, especially those involving sales personnel, to forestall or prevent competition.
Courts prejudicially devoted to supporting employers do not even take this into account. In many states, statutes preclude non-compete agreements that stifle competition or act as a restraint on trade. Even in those states, courts prejudicially devoted to supporting employers may ignore the restraint on trade, the over reaching and unequal bargaining power inherent in the non-compete clauses, and the disproportionate impact on the employee rather than the employer. Even a court inclined to enforce a non-compete clause that is a restraint of trade should consider the disproportionate impact and award fair compensation to the employee precluded from competing. Courts that do not do so risk becoming used in unseemly scrambles over customers that have nothing to do with trade secrets and only to do with protecting short term profits and economic inefficiency.
