Before Signing Archives

Non-Compete or Non-Solicit? Use “C.A.T.C.H.” to Understand It

Published on August 16th, 2016 by Alan L. Sklover

An Effective Way to Analyze Your Restrictions

“Limits, like fear, are often an illusion.”

– Michael Jordan

ACTUAL CASE HISTORY: For two weeks we were in a pitched battle in Federal court, trying to convince a Federal Judge to negate a non-competition agreement. Both sides had submitted legal briefs, and the Federal Judge ordered “oral argument,” which is each side giving its position, and the Judge hammering away at each side’s arguments with his questions.

Our client was a salesman in the field of medical devices, specializing in the sale of manufactured, artificial heart valves to hospitals for surgical replacement of damaged valves. After leaving his prior employer, he took a new job, and was doing quite well – until he was sued, and his new employer placed him on “Suspension – Leave of Absence” until the case was over.

In preparation for the upcoming “oral arguments” in perhaps my tenth reading of the non-competition agreement, I discovered something that no one else had discovered before, not even the Judge: the non-competition agreement was not, in fact, a non-competition agreement.

My careful reading revealed that working for a competitor was not, in fact, prohibited. What the supposed non-compete agreement prohibited was “working for a competing medical device manufacturer, anywhere in the eastern half of the United States, that sells to hospitals replacement heart valves based on the same technology.”

That last phrase, those final five words, and their importance, had somehow escaped notice by several people. There was no prohibition against working for a competitor, but only on working for a competitor while selling heart valves based on the same technology. The restriction was on using a certain technology more than it was on working for a competitor.

In fact, the new employer did not sell manufactured, artificial heart valves, but instead heart valves derived from the hearts of pigs. Neither the lawyers nor the Judge were familiar with the technology, and just assumed the same technology was used. Fortunately, I recalled hearing of the distinction during my initial, in-depth consultation with my client.

We asked permission to submit a supplemental brief to the Court on this very point, and the Judge permitted it. After conferring with their client, the former employer’s attorneys withdrew the case. Noticing just five words – based on the same technology – that’s all it took.

LESSON TO LEARN: When it comes to non-competition and non-solicitation agreements, “The answer to your question is almost always right there, in the words.” Reading dense legal agreements can sure put a lot of people to sleep – including lawyers. That’s always the case in law, but there is no substitute for careful reading and analysis, especially when it comes to non-competition agreements and non-solicitation agreements.

I have seen it time and time again: the applicability, effect, validity, and duration of non-competition and non-solicitation agreements being misread and misunderstood, and for this reason unnecessarily limiting the client’s career by false fears. I’ve seen it time and again: highly qualified and experienced lawyers telling their clients “Sorry, there is nothing we can do” when, in fact, all that is necessary to win a person’s employment freedom is to read and analyze carefully.

To assist you in doing that for yourself, in my 30+ years of handling non-competition and non-solicitation disputes, I’ve devised a rather simple way to analyze non-competition and non-solicitation agreements. It’s what I have come to call “C.A.T.C.H.,” which stands for (1) Competition, (2) Activity, (3) Time, (4) Conditions, and (5) Horizon.

This is not the usual, hackneyed “Geography, Duration, Scope” legal analysis that so many lawyers will refer to when discussing non-competition agreements. What they would be talking about is that a Judge will often look at the reasonableness of the restrictions’ “Geography, Duration, Scope” and cut one or more of them down if the Judge thinks they are unreasonable.

Our “C.A.T.C.H.” analysis is more immediate, more valuable and more important: “Does this non-competition or non-solicitation agreement even apply to you?” Might careful reading and analysis reveal you have no reason to hire an attorney, due to potentially unfounded fear based on an incorrect analysis? Why hire an attorney, and consider going to Court, if you really don’t need to? More importantly, why turn down a job offer, or not seek one, if you are not really restricted?

This endeavor is not “legal nit-picking.” Instead, it is the essential task of every employed person: to protect your employment freedom, and to utilize your business skills, experience and relations to your very best advantage.

I hope you find my “C.A.T.C.H.” analysis helpful, and its title a little “catchy.”

WHAT YOU CAN DO: Here’s eight steps you can use to help yourself understand whether or not, how badly or not, you may be restricted by a non-competition agreement or non-solicitation clause you have signed, or you may be asked to sign. And, too, they may help you understand how to get around any such restrictions. As Michael Jordan says, “Limits, like fear, are often an illusion.”
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“Employer Ask You to Sign an Agreement? Ask Your Employer to Pay Your Legal Cost”

Published on September 9th, 2015 by Alan L. Sklover

“I busted a mirror and got seven years bad luck, but my lawyer thinks he can get me five.”

– Steven Wright

ACTUAL “CASE HISTORY: Charlene, a furniture designer, had been with her employer for seven years. She was happy in her job, was well-liked, and quite productive. Her job was a short commute from home, and her manager was family-friendly. All was good.

One morning she received an email from the Human Resources Director, addressed to all of the company’s 150 employees, advising them that the company was updating all of its employment practices, and for this reason all employees were required to sign an updated “Confidentiality and Inventions Agreement” to safeguard the company’s trade secrets and proprietary information. (Rumor had it that a private equity firm might be interested in buying Charlene’s employer, and it was for this reason that a new, revised Confidentiality and Inventions Agreement was being required.)

The agreement was six pages long and contained a lot of complicated legal language. Charlene thought she understood it, but there was a lot “legalese” in it. She considered having our firm review it with her, but knew it would cost her a consultation fee of hundreds of dollars. When she called, she mentioned the unfairness of her employer requiring her to pay to review a document that they needed, not her.

We suggested she simply ask for the cost to be reimbursed. Sure enough, she did. After a few emails back and forth, her employer agreed to treat it just like any other business-related expense. Charlene was pleased. We were pleased, and now we suggest all employees in this situation do so. You never know. Sure is worth a shot.

LESSON TO LEARN: If you don’t ask, you won’t get. So long as any workplace request has the “Three R’s,” that is, it is (i) Respectfully presented, (ii) Reasonable in what is sought, and (iii) is based on a sound and logical Rationale, there really is no downside to making it.

The logic is simple: When someone wants something from you, and even moreso when they need it, there is nothing wrong with asking for something in return, especially the amount of money it will cost you to provide it for them.

Who knows? You might just get what you want. In this context, your chances are pretty good. Why not give it a try?

WHAT YOU CAN DO: In most – but not all – workplace instances of your employer asking you to sign an agreement, consider asking, in return, before you sign the agreement, that your employer agree to reimburse you the cost of an attorney’s review and consultation. Here are some tips in doing so:
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You Must Protect Your “B.O.B.” (Book Of Business, That Is)

Published on May 5th, 2015 by Alan L. Sklover

“Do not protect yourself by fences,
but rather by friends.”

– Czech Proverb

ACTUAL “CASE HISTORY: Valerie was the kind of person who made friends – and customers – easily. She smiled a lot, conveyed honesty, had a caring nature, was attentive to people’s needs, and followed up on every possible lead that came her way. Working from home as an independent insurance representative selling long-term care policies of several insurers, she did quite well. Her book of business – what some people call a “B.O.B.” – had grown steadily over the years.

Through mutual acquaintances, Valerie got to know the three owners of a local insurance agency. Eventually, she was asked if she would like to join their firm. The basic deal offered to her was this: “Join our team, and after two years of working together, if things go well, you will become one of four owners, without any investment on your part.” Valerie saw this as a way to move up in her industry, have back-office staff to assist her, and eventually be able to take a bit more time for herself and her family.

After papers were signed, Valerie became the firm’s “specialist” in long-term care policies. As she envisioned, the agency’s office staff supported her client relations and a younger sales representative was appointed her assistant. And, too, Valerie did take more time off to be with her family, because support staff and her sales representative assistant became known to, and trusted by, her customers.

After the first year, though, Valerie noticed she was not being invited to partner meetings, as she had been during the first year. And, too, she noticed that when she asked for sales reports, they were often not complete and never given to her promptly, as they had been during the first year. What troubled her the most, though, was that her sale representative assistant was starting to counsel her clients, and close deals with her clients, without involving her. Sometimes without even telling her.

Soon after Valerie objected, a partnership meeting was scheduled, and she was told that these were now “company clients,” and not her clients. She was told that they were now “company accounts,” not her accounts. And that these were now “company relationships,” not her relationships. She shared her view that “This was definitely not the deal.” Soon thereafter, though, she was given formal notice to leave the firm, and that she would receive a severance of three months’ of partner draws, which is what the papers provided for. That was just fine with Valerie, because if they were not going to honor the deal she believed they made – during many discussions – then she would rather be back on her own again.

But three big problems arose: (1) She was sent a formal letter reminding her that the papers she had signed had included a one-year non-compete provision that was to be effective if she was ever to leave the firm. Valerie thought her lawyer would take care of that. (2) Valerie no longer had any of her clients’ insurance files, as they had become entirely integrated into the firm’s computer network, and she had no hard copies. (3) Worst of all, many of her clients now seemed quite happy to remain clients of the firm because they had grown so close with Valerie’s Sales Representative Assistant and the firm’s support staff.

Simply put, Valerie had somehow managed to lose her “Book of Business,” her “stock in trade” developed and cultivated over many years, and had to start over again – from “scratch.”

LESSON TO LEARN: There will always be some people out there who will steal from you if you let them, and in business “stealing” clients has been going on for thousands of years. If your job is “customer-facing,” that is, related to sales, service, or business development, sooner or later you will come to recognize how important it is to Protect Your B.O.B.

You can learn how to Protect Your “B.O.B.” the “easy, inexpensive way,” or as Valerie did, that is, the “hard and expensive way.” As relationships are the heart of business, at all times you must always be on guard not to leave yourself vulnerable to losing the valuable good will and reservoir of trust you have built up over many years, for it may be your most valuable income-producing asset in employment and business. And even those whose jobs are not “customer-facing” have a “B.O.B.” of their own.

WHAT YOU CAN DO: In many ways, every employee – and surely every employee who interfaces with customers – has his or her own business “franchise” that needs to be protected. That “franchise” is comprised of his or her clients and customers who believe in them, trust them, feel better about being affiliated with the company because of them, and would prefer to continue to do business with them in the future. As the saying goes, “Trust is the residue of promises fulfilled.”

Business is a whole lot about relationships, and your financial success, job security and value to employers may well depend on your always “Protecting Your B.O.B.” or your Book of Business. Here are 10 ways to help you do just that:
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Injunction – Key Words & Phrases

Published on August 14th, 2014 by Alan L Sklover

Key Words

What is the meaning of:

“INJUNCTION”?

An “injunction” is a Court order that requires a person to either (a) do, or (b) stop doing, a specific action.

It is considered an extraordinary judicial remedy because it extends the power of the Court into the lives of people in a way that is much more intrusive that would be a verdict for monetary damages. In fact, if a person fails to comply with a Court’s injunction, he or she can be held in “contempt of court,” and even jailed.

In general, there are two kinds of injunctions: “Preliminary” or “Permanent.” A “Preliminary” injunction is commonly requested at the very beginning of a lawsuit when someone claims to the Court “it is essential that we protect the status quo. We cannot wait years until the end of this lawsuit, or greater – perhaps irreparable – damage will be done.” If granted, a preliminary injunction lasts only until the end of the lawsuit.

For example, if an employer has reason to believe that an employee has stolen a secret and valuable recipe or chemical formula, it might ask the Court to issue a Preliminary Injunction at the beginning of a lawsuit regarding this issue.

Because Preliminary Injunctions are requested before the Court knows all of the facts – not just the employer’s version of the facts – the Court will require a strong showing of evidence before agreeing to issue the requested injunction.

At the end of a lawsuit, if the person bringing the lawsuit is found deserving of long-term protection, then a “Permanent” injunction may be issued by the Court, to remain in force indefinitely.

We are often involved in cases involving injunctions when an employer seeks to stop a former employee from allegedly stealing secrets or violating a non-compete agreement.

To obtain a copy of our 185-Point Master Guide & Checklist to Non-Compete’s, just [click here.] 

Fortunately, through “self-help,” non-compete agreements can be “navigated,” negotiated, defended against, and, quite often, defeated. That takes some knowledge, insight and perspective on restrictive covenants.

We provide Model Letters for your Self-Help to address issues of Non-Compete Agreements and other restrictions. Just [click here] and see Section M [Non-Compete Agreements and Other Restrictions.]    

To learn more about these matters, simply [click here.]  

© 2014 Alan L. Sklover. All Rights Reserved. Commercial Use Strictly Prohibited

Restrictive Covenant – Key Words & Phrases

Published on January 29th, 2014 by Alan L Sklover

Key Words

What is the meaning of:

Restrictive Covenant?

Quite simply, a “Restrictive Covenant” is a “Promise to Limit Future Freedom.”

The most common examples of restrictive covenants are (a) promises not to work for your employer’s competitors in the future (“non-compete” agreements), (b) promises not to solicit business from your employer’s customers in the future (“non-solicitation” agreements), and (c) promises not to hire your employer’s employees in the future (“no hire” agreements.”)

In addition, promises not to share confidential or proprietary information belonging to your employer (“confidentiality agreements”) are also kinds of restrictive covenants.

You need to take all restrictive covenants seriously for two important reasons: (i) First, prospective employers may decide not to hire you if your anticipated duties might result in an allegation of violation of one of these agreements, because the prospective employer would fear it could be involved in a lawsuit. (ii) Also, ignoring the potential impact of a restrictive covenant could involve you in a lawsuit, which would inevitably be disruptive or harmful to your career.

Fortunately, restrictive covenants can be “navigated,” negotiated, defended against, and, quite often, defeated. That takes some knowledge, insight and perspective on restrictive covenants.

To help you help yourself, we provide that to you on our blogsite. To learn more about these matters, simply [click here.]

© 2014 Alan L. Sklover. All Rights Reserved. Commercial Use Strictly Prohibited


Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

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