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Labor and Employment Law

Noncompete Answers: Am I Bound If My Employer Violates FMLA?; Wages Cut Right After Signing; Can They Restrict My Livelihood?

 Having received more questions on noncompete agreements than any other issue, I can only assume that more and more employers are imposing these contracts on employees all over the country. There are lots of defenses to them, but defending takes money. I continue to hope that some legislators will wise up and help their constituents escape indentured servitude, or that some attorneys general will start fighting illegal noncompetes with antitrust laws. In the meantime, I'll keep trying to answer your questions. I encourage anyone who is being asked to sign one, or whose ex-employer is trying to enforce one, to contact an employment attorney in your state for advice. Here are my general answers (not legal advice) to some more non-competition agreement questions:

If My Employer Violates FMLA, Am I Still Bound By My Noncompete?

Hi . I am a nurse, licensed in Kentucky. I had worked 6 plus years with a contact agency that was contracted to the state. My question is this - when an agency is contracted to such an entity, do they have to follow the state's policies and protocol for discipline? I had been a very well respected and appreciated employee that had been contracted to the same entity for over 12 years. When I was both working full-time and caring for my dying Father at home, I had periods of tardiness, which was never a past problem. I was ultimately released by both the Vendor and my agency. My question is this - was it not my agency's place to request - on my behalf - FMLA? I did win my unemployment case.Would I still be bound to my former agency's full non-compete ? 

Gloria L.

Hi Gloria. I'm sorry to hear about your father and the loss of your job all at once. As to the noncompete agreement, there's a defense to enforcement called "unclean hands." This defense means that if your employer wants to keep you from working for a competitor, they must have acted ethically and in good faith. If they broke the law or did something wrong to you, then a court might be persuaded not to issue an order that you can't work for a competitor.

As to whether they have to follow your state's policies, that will depend on their contract with the state. Does that get you anywhere in defending against a noncompete agreement? I don't know how, but it's possible maybe you'd have a wrongful termination claim in your state if they were bound by certain procedures.

Now, let's talk about that FMLA claim. You have to notify your employer of your need for FMLA in most cases. That means, when you saw that your productivity was slipping and you couldn't get in on time, you should have asked for FMLA, either regular or intermittent, so you could fulfill your duties as caregiver for your father. They'd have had to grant it based on what you describe. However, you didn't ask. Should they have offered it? It sounds like they were on notice that you were a caregiver and that you were in trouble, so maybe they should have. This might be a FMLA violation. You should talk to a Kentucky employment lawyer. 

Does all of this get you out of the noncompete? Maybe. Good luck!

I Signed, Then My Employer Cut My Wages

I was asked to sign a noncompete, & when I did was informed that my wages were being cut. No wages were specified in the contract, but had I known beforehand, I would not have signed. Also, less than a week after I signed it my hours were cut & have since been cut to zero. I have since signing, been in a hostile work environment & made to feel I'm doing everything wrong. I am now at zero hours. & I also believe I have grounds for a discrimination & sexual harrassment case. 

Tessa M.

Hi Tessa. In some states, continued employment is valid consideration for a noncompete agreement. That means employers in those states can shove an agreement in front of you and say, "Sign or be fired." However, if they knew they were about to cut your wages and then cut your hours to zero, they should have disclosed it before you signed. The defense you may have is fraud.

As I discussed above, discrimination and sexual harassment might also support a defense of "unclean hands." I'd suggest talking to an employment lawyer in your state about these two defenses and any other defenses you have to enforcement of this agreement.

Is It Legal To Restrict My Livelihood?

I work in Texas and I am reviewing a Non-Competition agreement with the following stipulations:

1.3 Non-Solicitation-Non-Competition. Without prior written approval of COMPANY X management, Consultant agrees:

(a) For a period of twelve (12) months following the termination of this Agreement or the relationship provided hereunder, Consultant will not, either directly or indirectly, call on, solicit, or induce any Consultant or employee of COMPANY X whom Consultant had contact with, knowledge of, or association with in the course of this relationship to terminate his or her employment with Company X.
(b) For a period of twelve (12) months following the termination of this Agreement or relationship provided hereunder, Consultant will not form or hold an interest in any entity that directly competes with COMPANY X.
(c) During the term of this agreement for a period of twelve months following termination of this agreement with COMPANY X, Consultant shall not solicit or induce, any past or current customer of COMPANY X to cease doing business, in whole or in part, with COMPANY X.

Is this legal to create this kind of document--affecting a persons livelihood for an entire year? If that company lays me off can they stop me from pursuing my line of work?

Would you suggest a strategy for filling out this paperwork?

Steve C.

Hi Steve. It really depends on what work you are doing and what kind of business this is. If you are a chemical engineer developing the new formula for Coke, then I can see how they wouldn't want you to go straight to work for Pepsi or form your own soda company. You have a vital trade secret that they need to protect. They might have a legitimate interest to protect. However, if you're contracted to do their landscaping or waste removal, it's hard to imagine any possible interest they would have to protect other than preventing competition.

An agreement that is solely for the purpose of preventing competition violates antitrust laws

Since you're a contractor, you can always say no. If they want you, then you have the power to negotiate more reasonable terms. The time to negotiate is before you sign.

See more employment law posts on Donna Ballman's blog, Screw You Guys, I'm Going Home

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