DIY Employment and Noncompete Agreements: Are You Getting What you Pay For?

DIY InstructionsThe storm that has devastated the U.S. east coast has been dubbed "Frankenstorm" because of the devastating effect of a number of separate natural conditions coming together to create a monstrous "super storm."  

While with less devastation and real-life danger, employers often experience their own employment storms as a result of stitching together various employment agreements in a "do it yourself" approach to managing employment issues. Certainly businesses can't be faulted for trying to limit their operational expenses, but too much cost-cutting may end up hurting the business in the long run. 

Take for example a noncompete dispute matter my law firm recently handled:  Specifically, we had the opportunity to take advantage of a "Frankenstein-like" HR strategy to challenge an employer's noncompete agreement and reach a resolution that favored my sales representative client.     

Generally speaking, the employer's new employment hire package contained two separate employment related provisions: One provision of the agreement contained a boiler-plate noncompete restriction. It was discovered that this noncompete provision actually came from the employer's out-of-state supplier and who knows where it came from before this.  

The other provision of the employment agreement contained a 90 day probationary period. The agreement and both provisions, however, had not been reviewed by legal counsel for the employer.

This failure explains why the two provisions - the probationary period and noncompete provision - conflicted. So setting aside the legal sufficiency of both, the real benefit for my client was that in piecing the two agreements together there was a solid argument that one provision negated the other. 

Free Employment Law Forms: Be Careful to Avoid You Getting What you Pay for.

The problem for the employer began and ended with its employment offer letter that provided in part "Either the employee or [employer] may terminate the employment within the introductory period, without consequences ..." 

So the argument to be made was as follows: To give full effect to the employer's provided agreement that if the individual's employment was terminated within the 90 day probationary period it would be "without consequence," required that the noncompete would also be of no consequence. 

The end result was that the discrepancy created by the employer's documents was enough to negotiate a favorable resolution for my client, including voiding the employer's noncompete provision calling for a year post-employment restriction and 60 mile restriction. 

The Take-away for Employers

Certainly companies have easy access to information over the Internet or through other, non-legal sources that can be used to prepare employment-related contracts, including offer letters and noncompete agreements. If this is the route your company chooses to take, at a minimum, companies should verify that any non-attorney drafted employment forms are valid for your state, are current, and are legally sufficient for your business needs and valid in your company's jurisdiction. 

But taking a "DIY" approach as your company's employment/HR strategy is certainly without risks as demonstrated by the above example.  As the above example illustrates, it is likely that had the employer's agreement been properly drafted by legal counsel, the employer would have ended up with what it intended; an enforceable noncompete restriction that protected the employer's reasonable competitive business interests by limiting its former sales representative from working in the specified geographical location for one year.

For more information about how noncompete agreements can protect your business against unfair competition, see Locking Down Trade Secrets Begins with Enforceable Noncompete and Nondisclosure Agreements or contact attorney Jason Shinn

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