Non-Compete Can Be Imposed Mid-Employment with No New Consideration(casetext.com)
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Non-Compete Can Be Imposed Mid-Employment with No New Consideration
https://casetext.com/posts/continued-employment-adequate-consideration-for-non-compete-imposed-mid-employment-hawaii-federal-judge-rules
12 comments
Are you a lawyer or a law student? :)
"The judge did not say that ... non-compete can be imposed on an employee who has an otherwise negotiated and executed employment agreement."
This is plain wrong. They said exactly this. Did you read the case (STANDARD REGISTER CO. V. KEALA)?
One of the people involved had a non-compete imposed after they had already signed and executed an employment agreement. The court said this is fine :)
As it quotes "it is not logical for a court to treat differently a covenant presented on the first day of work and one presented one week after the first day in the at-will employment setting. "
"The judge did not say that ... non-compete can be imposed on an employee who has an otherwise negotiated and executed employment agreement."
This is plain wrong. They said exactly this. Did you read the case (STANDARD REGISTER CO. V. KEALA)?
One of the people involved had a non-compete imposed after they had already signed and executed an employment agreement. The court said this is fine :)
As it quotes "it is not logical for a court to treat differently a covenant presented on the first day of work and one presented one week after the first day in the at-will employment setting. "
I'm a practicing corporate lawyer - i just have the same sn on reddit as on here.
And yeah, I did read the case, and you are wrong. A contract between an employer and employee is not an employment agreement - in this case, it was an NDA. Your quote literally contradicts what you are saying:
"it is not logical for a court to treat differently a covenant presented on the first day of work and one presented one week after the first day in the at-will employment setting. "
At will = not an employment agreement. You can - and often, do - sign NDAs, in addition to a whole bunch of other paperwork, on the first day of your job as an at will employee.
Let's put it another way: having an employment agreement is the opposite of being an at-will employee. One cannot be both. Having an at-will employment agreement, recognized in a contract, is still not an employment agreement - an employment agreement specifies a fixed term of employment.
Can't make it any clearer than that.
For the record, I'm a practicing corporate and IP attorney. I handle a lot of employment stuff as well - it comes with the territory.
And yeah, I did read the case, and you are wrong. A contract between an employer and employee is not an employment agreement - in this case, it was an NDA. Your quote literally contradicts what you are saying:
"it is not logical for a court to treat differently a covenant presented on the first day of work and one presented one week after the first day in the at-will employment setting. "
At will = not an employment agreement. You can - and often, do - sign NDAs, in addition to a whole bunch of other paperwork, on the first day of your job as an at will employee.
Let's put it another way: having an employment agreement is the opposite of being an at-will employee. One cannot be both. Having an at-will employment agreement, recognized in a contract, is still not an employment agreement - an employment agreement specifies a fixed term of employment.
Can't make it any clearer than that.
For the record, I'm a practicing corporate and IP attorney. I handle a lot of employment stuff as well - it comes with the territory.
". A contract between an employer and employee is not an employment agreement"
It seems you are limiting the term "employment agreement" to cover fixed-term employment contracts and what they entail. As a practicing corporate and IP attorney (which I am as well), you should pretty well know nobody uses it that way, not even courts. There are such things as at-will employment agreements. You are correct that non-fixed duration employment contracts are generally at-will, but that does not make them any less of employment agreements. If you do not believe you can make an at-will employment agreement, i don't know what to even tell you. Would you like me to cite 50 cases that disagree with you? :)
All employment is by contract, and all these contracts are employment agreements, whether they are implied contracts (which is what most at-will employment is, for sure), collective bargaining agreements, explicit negotiated agreements, or whatever. I can make a verbal at-will agreement too! It's still an employment agreement.
It is true that, in for example, california, labor code specifies at-will employment as the default employment relationship without a contract, but that does not mean if you have a written contract you cannot be at-will, or you cannot have an employment agreement (most of the written employment agreements that are at-will make you explicitly agree you are at will and cover a salary. These are very clearly employment agreements, as they cover your employment status and terms of your employment, etc). It also doesn't mean a verbal agreement wouldn't overcome that default.
But I guess if we fundamentally disagree on terminology, we aren't getting to space today.
It seems you are limiting the term "employment agreement" to cover fixed-term employment contracts and what they entail. As a practicing corporate and IP attorney (which I am as well), you should pretty well know nobody uses it that way, not even courts. There are such things as at-will employment agreements. You are correct that non-fixed duration employment contracts are generally at-will, but that does not make them any less of employment agreements. If you do not believe you can make an at-will employment agreement, i don't know what to even tell you. Would you like me to cite 50 cases that disagree with you? :)
All employment is by contract, and all these contracts are employment agreements, whether they are implied contracts (which is what most at-will employment is, for sure), collective bargaining agreements, explicit negotiated agreements, or whatever. I can make a verbal at-will agreement too! It's still an employment agreement.
It is true that, in for example, california, labor code specifies at-will employment as the default employment relationship without a contract, but that does not mean if you have a written contract you cannot be at-will, or you cannot have an employment agreement (most of the written employment agreements that are at-will make you explicitly agree you are at will and cover a salary. These are very clearly employment agreements, as they cover your employment status and terms of your employment, etc). It also doesn't mean a verbal agreement wouldn't overcome that default.
But I guess if we fundamentally disagree on terminology, we aren't getting to space today.
Another corporate and IP attorney here. DannyBee's view is held by many, many attorneys, me included.
(Nit & rant on DannyBee's comment: In the legal context, I wish people would stop using the colloquialism verbal agreement as if it meant only oral agreements and excluded written agreements. The primary meaning of the word verbal is "of, relating to, or consisting of words," from the Latin verbum, word [1]. A non-verbal agreement might be one that is reached, e.g., by sign language; by raised eyebrows and nodded heads, as long-time married couples sometimes do; or by other gestures.)
[1] http://www.merriam-webster.com/dictionary/verbal
(Nit & rant on DannyBee's comment: In the legal context, I wish people would stop using the colloquialism verbal agreement as if it meant only oral agreements and excluded written agreements. The primary meaning of the word verbal is "of, relating to, or consisting of words," from the Latin verbum, word [1]. A non-verbal agreement might be one that is reached, e.g., by sign language; by raised eyebrows and nodded heads, as long-time married couples sometimes do; or by other gestures.)
[1] http://www.merriam-webster.com/dictionary/verbal
I follow - in my practice, when dealing with the phrase "employment agreement" it almost always refers to an agreement with a fixed or minimum term of employment.
This is all beside the point. The central point is that an at-will employment agreement, reduced to writing or otherwise (NB: in NY State, it is explicitly the case that a contract regarding employment must be in writing if it is of an indefinite term, else it violates our statute of frauds - this has been dealt with affirmatively by the court of appeals) is definitionally terminable for any reason or no reason, at any time, without notice. In this regard, it is a type of adhesion agreement, and acceptance of each payment of consideration acts as a renewal of the agreement. As a result, its terms may be changed, at any time, by either party, where payment and acceptance of consideration acts as ratification of those terms, so long as the terms are not explicitly illegal.
This was my point. And that is the way this decision came out. It is 100% unproblematic.
Feel free to debate the semantics of whether an "employment agreement" means any contract relating to employment (is an NDA an employment agreement? What about an offer letter?) or if it can also mean a fixed or minimum term agreement (NB2: I've been involved in many labor disputes and maybe the use of "employment agreement" is dealt with as conceptually separate from "at will employment" more frequently by labor lawyers - I know that the labor lawyers I have worked with don't seem to use the two phrases interchangeably). It is not what I was arguing at all. And DannyBee got it wrong, explicitly. The judge explicitly limited the discussion to at-will employment.
To put it another way: this decision should only be surprising to someone who doesn't know about at-will employment or standard american employment practices. Having overseen the contentious separation of a dozen high level executives at my various clients, and having overseen the "employment agreements" (both at will and for fixed terms, just to be clear) for many, many dozens more, I can assure you, this decision, even if it were issued in New York, doesn't change my practice one iota.
This is all beside the point. The central point is that an at-will employment agreement, reduced to writing or otherwise (NB: in NY State, it is explicitly the case that a contract regarding employment must be in writing if it is of an indefinite term, else it violates our statute of frauds - this has been dealt with affirmatively by the court of appeals) is definitionally terminable for any reason or no reason, at any time, without notice. In this regard, it is a type of adhesion agreement, and acceptance of each payment of consideration acts as a renewal of the agreement. As a result, its terms may be changed, at any time, by either party, where payment and acceptance of consideration acts as ratification of those terms, so long as the terms are not explicitly illegal.
This was my point. And that is the way this decision came out. It is 100% unproblematic.
Feel free to debate the semantics of whether an "employment agreement" means any contract relating to employment (is an NDA an employment agreement? What about an offer letter?) or if it can also mean a fixed or minimum term agreement (NB2: I've been involved in many labor disputes and maybe the use of "employment agreement" is dealt with as conceptually separate from "at will employment" more frequently by labor lawyers - I know that the labor lawyers I have worked with don't seem to use the two phrases interchangeably). It is not what I was arguing at all. And DannyBee got it wrong, explicitly. The judge explicitly limited the discussion to at-will employment.
To put it another way: this decision should only be surprising to someone who doesn't know about at-will employment or standard american employment practices. Having overseen the contentious separation of a dozen high level executives at my various clients, and having overseen the "employment agreements" (both at will and for fixed terms, just to be clear) for many, many dozens more, I can assure you, this decision, even if it were issued in New York, doesn't change my practice one iota.
[deleted]
Here, btw, is the case
https://casetext.com/posts/continued-employment-adequate-con...
My understanding is, if your Hawaiian employer demanded you sign a noncompete, you could quit on the spot and the noncompete would not apply. Is that correct?
https://casetext.com/posts/continued-employment-adequate-con...
My understanding is, if your Hawaiian employer demanded you sign a noncompete, you could quit on the spot and the noncompete would not apply. Is that correct?
> My understanding is, if your Hawaiian employer demanded you sign a noncompete, you could quit on the spot and the noncompete would not apply. Is that correct?
Yes.
Yes.
(IANAL)
It might instead be beneficial to you, in terms of unemployment benefits and such, to instead refuse to sign and allow them to terminate you instead.
It might instead be beneficial to you, in terms of unemployment benefits and such, to instead refuse to sign and allow them to terminate you instead.
That would have to be true, wouldn't it? How could your employer hold you to a contract you didn't sign?
[deleted]
Doesn't this require a signature? If so, depending on the life circumstances, couldn't this be perceived as signing a contract under duress?
(I am not a lawyer, this is not legal advice or even my full opinion) I think that is the point. Terminating at-will employment isn't considered a threat/duress. One can't be for at will employment and against allowing employers to add new conditions to continue employment, because as the original commenter said that is the concept. Now a completely separate issue is if you are for at will employment. And like so many things it is important to use what it is defined to be (an not just the name) to make your judgement. Similar issue: "right to work states" (gotta decide that one again on what the laws say, not the title).
IANAL, but it might qualify if it where given without warning. As in sign this in 5 minutes or walk out the door. Though adding these out and giving someone a few days to sign or simply adding an effective date in the future would not qualify as duress.
Case in point people in some states are given a day or two to back out of a new car sale presumably due to high pressure tactics used at dealerships.
Case in point people in some states are given a day or two to back out of a new car sale presumably due to high pressure tactics used at dealerships.
Pretty much I agree. The "car deal back out" is because somebody passed a law to encode that. Similarly if you want employees to have reasonable rights- you have to pass the matching laws. I definitely think nobody should be walked out the door with zero severance- and that is why I am willing to support legislation that yields some employee rights.
I don't want to press my opinion too much. But I find it very frustrating when I hear people claim they are unconditionally in favor of "at will employment" and then claim they think some of the consequence are unfair and should not be allowed. I sincerely wish such people would revise their statements and say they are not fully for at will employment.
I don't want to press my opinion too much. But I find it very frustrating when I hear people claim they are unconditionally in favor of "at will employment" and then claim they think some of the consequence are unfair and should not be allowed. I sincerely wish such people would revise their statements and say they are not fully for at will employment.
(IANAL)
I guess the idea is, how does the fact that the employer can walk up to you at any point regardless and say "walk out the door" interplay with other facts and laws? Are you just constantly under duress? I would assume not, since you also have the mirrored right to just walk out the door of your own volition at any point.
I can see logic the in interpretation that this arrangement basically results in the constant ability to reconsider the employment agreement: "If you don't like it, you can leave at that very moment. Otherwise, you are bound to it."
I guess the idea is, how does the fact that the employer can walk up to you at any point regardless and say "walk out the door" interplay with other facts and laws? Are you just constantly under duress? I would assume not, since you also have the mirrored right to just walk out the door of your own volition at any point.
I can see logic the in interpretation that this arrangement basically results in the constant ability to reconsider the employment agreement: "If you don't like it, you can leave at that very moment. Otherwise, you are bound to it."
I think you have touched on the problem with At-will employment in general. Yes, at some callous employers you could face a "culture of fear". You won't be constantly under duress, but you could be miserable most of the time.
The problem as I see it is that the power of At-will employment rests mostly with the employer. It is asymmetrical. Most people could not afford to lose their job without serious financial difficulties, and if they disagree with some new policy in principal, then the only choice is to resign, be forced out, or continue working under the new policy.
Most employees will never be in a situation where they can say "Screw you, I'm not signing that". There's too much at stake. There are multiple reasons for this:
The job they hold does not pay them enough to save and emergency fund.
They don't practice good financial judgement.
They are ignorant of the risks of at-will employment.
They are in their comfort zone and don't want to push back.
They signed a non-compete agreement.
The problem as I see it is that the power of At-will employment rests mostly with the employer. It is asymmetrical. Most people could not afford to lose their job without serious financial difficulties, and if they disagree with some new policy in principal, then the only choice is to resign, be forced out, or continue working under the new policy.
Most employees will never be in a situation where they can say "Screw you, I'm not signing that". There's too much at stake. There are multiple reasons for this:
The job they hold does not pay them enough to save and emergency fund.
They don't practice good financial judgement.
They are ignorant of the risks of at-will employment.
They are in their comfort zone and don't want to push back.
They signed a non-compete agreement.
>The problem as I see it is that the power of At-will employment rests mostly with the employer. It is asymmetrical. Most people could not afford to lose their job without serious financial difficulties...
By the same token most employers can't afford to have key people walk out the door without serious financial difficulties. Anyone who thinks this is asymmetrical has never been tasked with making sure projects are staffed. Most technical people have left an employer in the lurch at some point.
By the same token most employers can't afford to have key people walk out the door without serious financial difficulties. Anyone who thinks this is asymmetrical has never been tasked with making sure projects are staffed. Most technical people have left an employer in the lurch at some point.
No one is indispensable, including and up to the CEO.
Even key employees can be replaced if properly managed.
If they are a key employee, they bide their time, plan, and locate a suitable replacement candidate. Once the replacement is up to speed, they let the replaced employee go. I've seen this happen a a lot in the companies I worked for.
Even key employees can be replaced if properly managed.
If they are a key employee, they bide their time, plan, and locate a suitable replacement candidate. Once the replacement is up to speed, they let the replaced employee go. I've seen this happen a a lot in the companies I worked for.
How is that different from you searching for another job, biding your time, and quitting when you have a suitable replacement candidate?
If that's the case, wouldn't that imply that a huge class of transactions for basic life necessities -- rent, most bills, etc -- be under duress as well?
That seems like a useless and counterproductive interpretation to me.
That seems like a useless and counterproductive interpretation to me.
"Under duress" seems to be a somewhat fuzzy classification, but most of these necessities have either very low costs for switching to another counterparty (if I don't like one grocer's offer, there are plenty of others around I can go to instead on the spot) or some limitation on what they can require (e.g., no kicking a tenant out without a month's notice). At-will employment seems to be the odd one out here, in that switching to a new job normally takes quite a bit of time and hassle.
Contract law is going to become far more complicated if 'yes means yes' and 'enthusiastic consent' ideas are ever applied to it.
How long does the period of continued employment need to be in order to be considered further consideration?
As a thought experiment, can I present you with a sign-or-else NDA on Monday. You sign it on Tuesday and I fire you on Wednesday?
Suppose my plan was to fire you regardless of whether you signed or not.
Now prove it. /evil
As a thought experiment, can I present you with a sign-or-else NDA on Monday. You sign it on Tuesday and I fire you on Wednesday?
Suppose my plan was to fire you regardless of whether you signed or not.
Now prove it. /evil
> How long does the period of continued employment need to be in order to be considered further consideration?
Non-zero.
In reality, my guess is that because courts don't love to see non-competes overbroadly upheld in the fist place, if you have a super restrictive non-compete that was given to you in exchange for $20, and it was given to say, a burger flipping teenager, or someone with dubious employment status, or huge medical bills, something else that made it an unequal bargaining position, it is very likely a court would reduce the scope of the non-compete or throw it out completely.
There are no hard and fast rules in non-compete-land. Courts can and do throw them out or reduce their geographic or conceptual boundaries relatively often. And the rules are not particularly byzantine or arcane - they are pretty straightforward. Sophisticated parties making a deal that includes valuable consideration in exchange for a business restriction will be upheld - a punitive contract for little money that basically prevents a worker from practicing his fungible skillset and keeping out of the taxpaying economy may not be.
Non-zero.
In reality, my guess is that because courts don't love to see non-competes overbroadly upheld in the fist place, if you have a super restrictive non-compete that was given to you in exchange for $20, and it was given to say, a burger flipping teenager, or someone with dubious employment status, or huge medical bills, something else that made it an unequal bargaining position, it is very likely a court would reduce the scope of the non-compete or throw it out completely.
There are no hard and fast rules in non-compete-land. Courts can and do throw them out or reduce their geographic or conceptual boundaries relatively often. And the rules are not particularly byzantine or arcane - they are pretty straightforward. Sophisticated parties making a deal that includes valuable consideration in exchange for a business restriction will be upheld - a punitive contract for little money that basically prevents a worker from practicing his fungible skillset and keeping out of the taxpaying economy may not be.
"Continued employment is, in fact, new consideration."
That is complete horseshit.
That is complete horseshit.
Thank you for the well-reasoned and eloquent response.
Snark aside, whether it is or is not actually depends on what state you're in. For many, it is not new consideration.[0]
[0] http://www.beckreedriden.com/wp-content/uploads/2012/09/Nonc...
Snark aside, whether it is or is not actually depends on what state you're in. For many, it is not new consideration.[0]
[0] http://www.beckreedriden.com/wp-content/uploads/2012/09/Nonc...
Very informative. So much varies by state. E.g. in Oregon:
Continued Employment is Sufficient Consideration: NoSome are a clear yes, some are a clear no, some are yes after a certain duration (I imagine to prevent notice the day before you get a paycheck, that sort of thing), some are yes under very specific circumstances.
Are you getting more money?
Yes?
More money = more consideration. End of story.
Yes?
More money = more consideration. End of story.
Counter-argument: in the early 1990s, the company at which I was working had a key technical employee leave. The next week, the company asked all the other technical employees to sign non-compete agreements. We all refused. Nothing more was said.
You always have the right to quit and work for a competitor up until you sign that right away, and the worst that they can do to you for not signing is fire you.
That was not Hawaii, though.
(I didn't realize quite how crazy some of the owners/managers of that company were until years later.)
You always have the right to quit and work for a competitor up until you sign that right away, and the worst that they can do to you for not signing is fire you.
That was not Hawaii, though.
(I didn't realize quite how crazy some of the owners/managers of that company were until years later.)
After working for an IT agency for years, my father was presented with a non-compete agreement and told he had to sign it. It made him realize that his clients were probably more loyal to him than to his company. Within a week he incorporated a business, left the company, and took all of his clients with him.
That's not much of a right, though.
Not your company, not your rights. Go join a worker's cooperative or start a union if you want more say in your employment.
Alternatively: Use your democratic right to make laws that employers have to follow or go to prison.
you don't have the right to make laws that violate other people's rights.
Are you saying that, because the employee doesn't own the company (or, you know, own shares), they don't get any rights?
That's... laughable.
That's... laughable.
Isn't that effectively what happens though? Barring strong worker's protections (which is not a thing in most of the US) or strong unions (which is not a thing either in most of the US), the only rights an employee gets are "take it or leave it". And that's pretty much what "at will employment" is.
For what it's worth, right to work states that have at will employment also means that a noncompete cannot prevent you from using your skill set to earn a living (aka - you have the "right to work" hence the name). In order for them to be enforceable at all they have to be extremely specific in scope and for a reasonable amount of time, usually only pertaining to not leaving for a direct competitor and taking existing clients with you.
Basically, if you live in an area with a lot of employment options, going to a competitor and trying to take customers with you would be enforceable. If you're in an area without a lot of options for what you do, the noncompete is toilet paper because you can't be prevented from earning a living.
Basically, if you live in an area with a lot of employment options, going to a competitor and trying to take customers with you would be enforceable. If you're in an area without a lot of options for what you do, the noncompete is toilet paper because you can't be prevented from earning a living.
The employee gets any and all rights afforded by local legislation. In most at-will U.S. States, it's almost nothing.
It's 2015. Worker rights have been dead for a decade now, not to imply they were strong at any point before.
We don't have rights via our skills. If you want to have better working conditions, bribe the politicians to make it so (unlikely because you probably aren't paid enough) or organize your fellows into striking until you get better terms (even more unlikely).
We don't have rights via our skills. If you want to have better working conditions, bribe the politicians to make it so (unlikely because you probably aren't paid enough) or organize your fellows into striking until you get better terms (even more unlikely).
Or start your own company, where you can make whatever rules you like.
I don't care who's company it is. Owning a company doesn't give you the right to do whatever you want.
For reference, "consideration" is the legal principal that contracts must be exchanges not just one sided commitments. E.g. if you had just quit and your employer asked you nicely to sign a noncompete, and you did sign, the contract would probably be invalid because you are getting nothing in return (I.e. no consideration) for your commitment not to compete with your former employer.
In contrast, the courts find "an offer of continued at-will employment is, by itself, sufficient consideration for a non-competition agreement." To me this is completely reasonable.
In contrast, the courts find "an offer of continued at-will employment is, by itself, sufficient consideration for a non-competition agreement." To me this is completely reasonable.
I agree with you within the framework of at-will employment.
However, at-will employment is, IMO, entirely unreasonable. While Europe seems to have gone too far in terms of labour requirements, the US (and Canada, where I'm from) could do with more, such as introducing reasonable regulations surrounding hiring/firing.
However, at-will employment is, IMO, entirely unreasonable. While Europe seems to have gone too far in terms of labour requirements, the US (and Canada, where I'm from) could do with more, such as introducing reasonable regulations surrounding hiring/firing.
Has Europe gone too far? Europe is a very diverse place, but in general, I think a lot of countries in Europe strike a very reasonable balance. The idea that a company should be able to fire someone on the spot over absolutely nothing, is completely unreasonable in an economic system where you need a job to live.
Introduce Basic Income, and I'm totally fine with at-will employment, however.
Introduce Basic Income, and I'm totally fine with at-will employment, however.
In any event it is a vestigial requirement in most US jurisdictions. Under the majority rule nominal consideration (i.e. $1) is sufficient, and courts won't look behind a declaration in the contract that it was tendered. So it is yet another boilerplate paragraph is added to every well drafted contract and that's that (again in most jurisdictions).
But, as far as I understand it, you still have to sign it or accept the 1$
Yes, you have to sign in order to form a valid contract.+ But that's a different part of contract doctrine than consideration. I'd argue consideration is a mostly vestigial doctrine, but contract formalities aren't.
In this case, I believe the employee signed, but then tried to argue the contract was invalid for lack of consideration. I don't know if there was nominal consideration recited or not, or what the Hawaiian rule on that is.
+ Well ... not necessarily sign, but an objective manifestation of intent to be bound, which most of the time means sign.
In this case, I believe the employee signed, but then tried to argue the contract was invalid for lack of consideration. I don't know if there was nominal consideration recited or not, or what the Hawaiian rule on that is.
+ Well ... not necessarily sign, but an objective manifestation of intent to be bound, which most of the time means sign.
To me, it's not. They're putting more burden on you, for the same amount of pay, effectively decreasing your pay. Add that with the goal of non-competes being to make it harder for you to leave the company, thus lowering your bargaining power, and lowering your compensation.
Fuck non-competes, and fuck businesses who use them.
Fuck non-competes, and fuck businesses who use them.
They are effectively giving you a pay cut, that's true.
But, you can quit, and if you do so without signing the non-compete agreement, then it has no force.
But, you can quit, and if you do so without signing the non-compete agreement, then it has no force.
That's a very shitty amount of recourse.
... under Hawaii law. California law makes noncompetes generally unenforceable regardless of consideration, and other states have other variations.
And it's not even a binding precedent under Hawaiian law; it's a federal judge's interpretation of Hawaiian law necessary to resolve some federal matter, but Hawaiian courts could differ in their interpretation.
And it's not even a binding precedent under Hawaiian law; it's a federal judge's interpretation of Hawaiian law necessary to resolve some federal matter, but Hawaiian courts could differ in their interpretation.
I work in California and hired a lawyer to nullify a non-compete clause. The company backed off when my lawyer cited case law that basically says if a company attempts to clamp down on a skill you had pre-existing to employment, ALL previous contracts become null and void. California views this kind of corporate behavior as a form of enslavement.
Quite reasonable given California's history, as "You'll never work in this town again" is a threat with some very real weight behind it for the Tinseltown population.
That particular case isn't helped by labor laws, as the threat isn't enforced legally. They put your name on a blacklist and all of a sudden you find that nobody will hire you. I don't know the specific provenance of that legal precedent, but I doubt it had anything to do with Hollywood.
Generally, but not in all cases. IANAL, but if you are an officer or key employee of a company that's acquired, the acquirer can enforce non-competes because it affects the value of the acquisition. There's a specific section of the California employment code that talks about this, but I don't have it handy right now.
Business and Professions Code 16600
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&gr...
Thank you!
I was going to give another "not a lawyer but" reply, since I had heard that the only conditions in which a non-compete could be legal in California was if the owner of the business was selling his stake along with his own good-will, and then could be barred from competing as part of the terms of the agreement of sale.
But at a glance that's only 16601 from the page you linked, the page goes on for another 6 whole sections of code after that. So, there are more ways it can be legal in CA.
I was going to give another "not a lawyer but" reply, since I had heard that the only conditions in which a non-compete could be legal in California was if the owner of the business was selling his stake along with his own good-will, and then could be barred from competing as part of the terms of the agreement of sale.
But at a glance that's only 16601 from the page you linked, the page goes on for another 6 whole sections of code after that. So, there are more ways it can be legal in CA.
Can't employers impose pretty much any (legal) new requirements for at-will employees?
At-will means that your employer can terminate your employment at any time, with or without cause (and you can leave your employment at any time). So if you don't like a change in your employment terms, you are free to go, or your employer is free to fire you.
At-will means that your employer can terminate your employment at any time, with or without cause (and you can leave your employment at any time). So if you don't like a change in your employment terms, you are free to go, or your employer is free to fire you.
The question comes up because in order for a contract (the non-compete) to be legally valid, both sides have to give "consideration." Consideration is a legal term of art that means each sides has to promise something of value. If I sign a paper that says, "I'll give Johny555 50 bucks in exchange for nothing," it's not a real contract.
There is a doctrine called the preexisting duty rule that says that something already owed doesn't count as consideration. If you owe me 50 bucks, and you make me sign a paper that says if you pay me back the 50 bucks I'll paint your chicken coup, that isn't a contract. You already owe me the 50 bucks. It's a way to stop people from changing a deal halfway through. <insert VaderAtCloudCity.JPEG>
The issue here isn't whether the company can terminate you for refusing to sign. They can. But if you sign it, does it become a legal contract?
One side argues no, because your consideration is keeping the same job you already had. The other side says at will employment can be terminated at any time and keeping your job isn't a duty the employer already had. This court went with the later.
There is a doctrine called the preexisting duty rule that says that something already owed doesn't count as consideration. If you owe me 50 bucks, and you make me sign a paper that says if you pay me back the 50 bucks I'll paint your chicken coup, that isn't a contract. You already owe me the 50 bucks. It's a way to stop people from changing a deal halfway through. <insert VaderAtCloudCity.JPEG>
The issue here isn't whether the company can terminate you for refusing to sign. They can. But if you sign it, does it become a legal contract?
One side argues no, because your consideration is keeping the same job you already had. The other side says at will employment can be terminated at any time and keeping your job isn't a duty the employer already had. This court went with the later.
At will means you aren't owed the job you currently have. You are owed pay for all work currently done, but you aren't owed being employed tomorrow.
Say I have a contract with you so that every week I give you 50 and you paint my chicken coup (I want it to be a different color every week to confuse the chickens). Now one day, you say you will terminate my contract unless I pay 55 instead.
Is this you getting 5 for nothing (this is the delta between the old contract and the purposed one) or is it you getting 55 and I getting a painted coup? Well, as long as the contract allowed you or I to end the arrangement at any time, I'd say it was the latter.
Say I have a contract with you so that every week I give you 50 and you paint my chicken coup (I want it to be a different color every week to confuse the chickens). Now one day, you say you will terminate my contract unless I pay 55 instead.
Is this you getting 5 for nothing (this is the delta between the old contract and the purposed one) or is it you getting 55 and I getting a painted coup? Well, as long as the contract allowed you or I to end the arrangement at any time, I'd say it was the latter.
If at will employment doesn't carry any promise or value[1], why should it be allowed as consideration in the first place. It's an empty promise.
[1]-and I agree it doesn't
[1]-and I agree it doesn't
Yeah, something similar was mentioned in the article. If this wasn't legal, they could just fire you, then offer to hire you under the new terms the next day.
I'd argue that is still fundamentally different than just requiring the signature to keep your job. Getting laid off has different consequences than quitting.
I realize most states disagree with me, but I think it's absurd. If at will employment is so meaningless that it's no different from being fired, it shouldn't even be consideration in the first place. These courts are treating at will employment as a meaningless promise in one scenario, but as having some value in another.
I realize most states disagree with me, but I think it's absurd. If at will employment is so meaningless that it's no different from being fired, it shouldn't even be consideration in the first place. These courts are treating at will employment as a meaningless promise in one scenario, but as having some value in another.
Getting laid off has different consequences than quitting.
Yes, the first thing I wondered about this would be whether it's permissible to describe being handed the noncompete with an order to sign it or leave as termination with zero notice.
Yes, the first thing I wondered about this would be whether it's permissible to describe being handed the noncompete with an order to sign it or leave as termination with zero notice.
Some companies routinely do this as part of an acquisition. One former employer started doing it right after the acquisition of which I was a part, when they didn't do it that way and subsequently found that the employee agreements they'd rammed down our throats weren't worth the paper they were written on.
>Can't employers impose pretty much any (legal) new requirements for at-will employees?
Either side can 'impose' any requirements they want on the other party. The other side can refuse to accept the new impositions.
The imposing party had better be ready to fulfill all their outstanding obligations immediately upon termination and/or rejection of new terms though.
Either side can 'impose' any requirements they want on the other party. The other side can refuse to accept the new impositions.
The imposing party had better be ready to fulfill all their outstanding obligations immediately upon termination and/or rejection of new terms though.
Technically either side can. However, it's not a hard guess as to which side actually has the power to impose something like this. And it's not the employees.
An individual in large group of un-sympathetic co-employees has little power, but as a critical group of employees...they can basically impose whatever they want. They are the company, or at least enough of it to shut it down until their demands are met.
So this situation happened to me in 1996 in Texas a right to work state.
1.) My boss came and asked me to sign a non-compete after learning that I ran a similar business in another city after 3 years of working for him.
2.) I was not competing as none of my customers were his customers. My business in Houston. His in a small town 60 miles away.
3.) I went to a lawyer and asked if I had to sign and if this non-compete (said I couldn't work on any computer in Texas within two years of termination) would apply. Lawyer said it was ridiculous and while it wouldn't hold up in court he had the right to lay me off for not signing it.
4.) I refused to sign on principle and was laid off. I went to draw unemployment and he fought it. I was granted unemployment but, quickly found a newer higher paying job anyway.
1.) My boss came and asked me to sign a non-compete after learning that I ran a similar business in another city after 3 years of working for him.
2.) I was not competing as none of my customers were his customers. My business in Houston. His in a small town 60 miles away.
3.) I went to a lawyer and asked if I had to sign and if this non-compete (said I couldn't work on any computer in Texas within two years of termination) would apply. Lawyer said it was ridiculous and while it wouldn't hold up in court he had the right to lay me off for not signing it.
4.) I refused to sign on principle and was laid off. I went to draw unemployment and he fought it. I was granted unemployment but, quickly found a newer higher paying job anyway.
Texas may be "Right to Work" but right to work has nothing to do with this. It has everything to do with the doctrine of "Employment-At-Will" of which 49 states follow. (Montana, I thank you for not following the employment at will doctrine)
I can't believe that there are so many people out there which get the two terms confused. Maybe we need to teach public high school students basic employment law in their civics classes.
I can't believe that there are so many people out there which get the two terms confused. Maybe we need to teach public high school students basic employment law in their civics classes.
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Basically what my lawyer told me was that...
1.) He could lay me off for not signing.
2.) If he ever tried to sue me over it that anything it said was pretty much worthless. As a full time employee I had 3 years of history working there. The lawyer specifically told me nothing I signed would apply to me. He also stated unless I was black or female I had no lawsuit to keep my job. Not sure if this case states the document would ever hold up in court but, at least in my case, I was told there was no chance. This might be different for a contractor.
1.) He could lay me off for not signing.
2.) If he ever tried to sue me over it that anything it said was pretty much worthless. As a full time employee I had 3 years of history working there. The lawyer specifically told me nothing I signed would apply to me. He also stated unless I was black or female I had no lawsuit to keep my job. Not sure if this case states the document would ever hold up in court but, at least in my case, I was told there was no chance. This might be different for a contractor.
From what I've heard, here in my part of Canada anyway, employers can you make sign this but it's pretty much powerless. It is illegal to keep someone from working and to slow down the economy. You can easily have this overturned by the court.
In some states, sufficient consideration is continued employment, in other states, additional consideration must be offered. Here is a (rather old) state-by-state list:
http://www.beckreedriden.com/wp-content/uploads/2012/09/Nonc...
IMHO: Non-competes should be illegal, OR they must pay you "garden leave" at 100% of your salary for the duration of the noncompete. Garden leave will limit the use of non-competes to those cases where it is a absolute business necessity and eliminate it being used as a tool to suppress the free movement of talent.
http://www.beckreedriden.com/wp-content/uploads/2012/09/Nonc...
IMHO: Non-competes should be illegal, OR they must pay you "garden leave" at 100% of your salary for the duration of the noncompete. Garden leave will limit the use of non-competes to those cases where it is a absolute business necessity and eliminate it being used as a tool to suppress the free movement of talent.
Is a new signature required from the worker, in order to make the newly added non-compete binding, or not? This part seems confusing from that summary.
If the workers signed a new non-compete and then continued to work for the company, this ruling seems pretty obvious.
If this is something like adding in a non-compete to an existing employment agreement without needing to obtain a new signature (as the completely insane UK laws allow,) then this is very bad.
If the workers signed a new non-compete and then continued to work for the company, this ruling seems pretty obvious.
If this is something like adding in a non-compete to an existing employment agreement without needing to obtain a new signature (as the completely insane UK laws allow,) then this is very bad.
That was my first thought at well. From the article:
The Court framed the issue as:
…whether non-competition agreements require additional consideration beyond continued at-will employment before binding agreements are formed. The issue arises if a current employee is required to sign such an agreement as a condition of continued employment, without any further benefits or consideration.
So, this isn't really anything new for jurisdictions that support at-will employment and don't require reasons for termination. Not really any different than an employer telling you your expected duties have changed. You still have the option to quit, they still have the option to fire you.
The Court framed the issue as:
…whether non-competition agreements require additional consideration beyond continued at-will employment before binding agreements are formed. The issue arises if a current employee is required to sign such an agreement as a condition of continued employment, without any further benefits or consideration.
So, this isn't really anything new for jurisdictions that support at-will employment and don't require reasons for termination. Not really any different than an employer telling you your expected duties have changed. You still have the option to quit, they still have the option to fire you.
as the completely insane UK laws allow
While you can technically make changes to an employment contract in th UK without requiring a new signature, agreement from the employee is required. If an employer tries to enforce changes without agreement, an employment tribunal will almost certainly rule in an employee's favour.
While you can technically make changes to an employment contract in th UK without requiring a new signature, agreement from the employee is required. If an employer tries to enforce changes without agreement, an employment tribunal will almost certainly rule in an employee's favour.
Shockingly, signature is often not actually required in the UK for changes to employment contracts. Sorry I can't find better sources at the moment, but this was recently ruled on again by the UK courts. No signature is required, simply remaining at the job is enough to constitute acceptance in the UK for employment contracts. The employers don't even to show any evidence that you were aware that the contract has been changed.
> Following on from this, a contract of employment does not need to be signed for it to be a binding agreement between the parties as acceptance of its terms can be either verbal or implied through conduct.
http://www.thisismoney.co.uk/money/experts/article-2715470/I...
Add to this, the UK courts are often upholding extremely unilateral employment contract clauses that give the employer the "right to change the contract without the employee's permission at any time." Extremely unilateral power. The UK courts see no problem with it at all. Quite insane.
> Following on from this, a contract of employment does not need to be signed for it to be a binding agreement between the parties as acceptance of its terms can be either verbal or implied through conduct.
http://www.thisismoney.co.uk/money/experts/article-2715470/I...
Add to this, the UK courts are often upholding extremely unilateral employment contract clauses that give the employer the "right to change the contract without the employee's permission at any time." Extremely unilateral power. The UK courts see no problem with it at all. Quite insane.
Sure; see my other response regarding this. AFAIK implied acceptance of contract is actually common in UK law.
It would be good to see some examples of court upholding "extremely unilateral employment contract clauses that give the employer the 'right to change the contract without the employee's permission at any time.'" – not because I don't believe you, I'm just interested in where this is happening. Unfair employment contracts are a bit of a political issue right now.
It would be good to see some examples of court upholding "extremely unilateral employment contract clauses that give the employer the 'right to change the contract without the employee's permission at any time.'" – not because I don't believe you, I'm just interested in where this is happening. Unfair employment contracts are a bit of a political issue right now.
What constitutes sufficient proof of agreement there? A clear paper trail would make sense. A verbal agreement not so much. What's required by the law?
I don't think the law specifies what form of agreement is required - however, an employer must confirm all changes in writing. Agreement at this point is implicit - if the employee does not agree with the changes, they have the right to refuse to work, to take the case to a tribunal, or in some cases to resign and claim constructive dismissal.
I know that if an employee doesn't agree with contract changes, they should take action immediately; continuing to work and not expressing your disagreement with the changes after you've been informed of them can be construes as implied agreement.
Employment law in the UK seems pretty worker-friendly in the sense that most companies will take great pains to avoid the risk of employment tribunals and other employee action, but I concede it's a bit less formalised than in other jurisdictions.
I know that if an employee doesn't agree with contract changes, they should take action immediately; continuing to work and not expressing your disagreement with the changes after you've been informed of them can be construes as implied agreement.
Employment law in the UK seems pretty worker-friendly in the sense that most companies will take great pains to avoid the risk of employment tribunals and other employee action, but I concede it's a bit less formalised than in other jurisdictions.
Witnesses, I guess.
I believe it is saying that you can be told sign this or your fired, and have no recourse but to sign or get fired.
Say you choose not to sign and are terminated. I wonder if this would be treated by the state unemployment agency as "Termination with cause", or "Terminated without cause i.e. laid off"?
If you are terminated with cause you can't collect unemployment benefits or Cobra.
I suspect that this will vary from state to state.
If you are terminated with cause you can't collect unemployment benefits or Cobra.
I suspect that this will vary from state to state.
So, this is definitely a clickbaitish headline, but things you should know:
~30 states agree that non-competes can be imposed after the fact and without anything additional being given to you.
~9 states say otherwise.
IE this is a pretty standard ruling.
Next i think y'all are gonna learn that you basically own nothing done in your own time when you work for large diversified tech companies. ;)
~30 states agree that non-competes can be imposed after the fact and without anything additional being given to you.
~9 states say otherwise.
IE this is a pretty standard ruling.
Next i think y'all are gonna learn that you basically own nothing done in your own time when you work for large diversified tech companies. ;)
Can I have an English translation please?
If you've been working at a company without having signed a non-compete, they can legally provide the ultimatum of "sign a non-compete or you're fired."
Edit: NDA -> Non-compete, because I hadn't had my afternoon coffee.
Edit: NDA -> Non-compete, because I hadn't had my afternoon coffee.
Continued employment is, in fact, new consideration. Each new paycheck you get, in an at-will employment relationship, is further consideration.
This meshes perfectly, without any dissonance, with the commonly understood function of at-will employment.
The judge did not say that you can impose non-compete retroactively, for no new consideration, or that non-compete can be imposed on an employee who has an otherwise negotiated and executed employment agreement.
In other words - this represents absolutely no change, whatsoever, from the commonly understood function of at-will employment. Water wet, sky blue. Move along here, folks.