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“Injunctive Relief” Clauses in Contracts – What Do They Mean?

Published on December 13th, 2016 by Alan L. Sklover

 
“Perhaps all pleasure is only relief.”

– William S. Burroughs

ACTUAL CASE HISTORY: Most employment contracts have a section in them, usually toward the end of the contract, labeled “Injunctive Relief,” or a phrase containing similar sounding words. It is inserted into employment contracts by employers’ legal counsel.

Contrary to many of my blog posts on clauses in employment contracts, it is a welcome change of pace to share with readers that this clause, in particular, is not very dangerous, risky or frightening. Those who commonly handle cases in which “injunctive relief” is requested will likely admit these clauses are of limited utility.

This is what an “Injunctive Relief” clause generally looks like:

“The Employee and Employer agree that, if the Employee breaches or threatens to breach his or her obligations not to compete, or not to violate confidentiality, it would cause irreparable injury, and the amount of money damages would be difficult to establish. For this reason Employee and Employer agree that, in such event, the Employer is entitled to Injunctive Relief to prevent or restrain any such breach.”

Even though they do not pose any danger or risk, employees should understand what these clauses mean, why they are inserted into employment contracts, and the few points employees might raise in response.

LESSON TO LEARN: Even though “injunctive relief” clauses are not usually harmful to employees, understanding what they mean can only help. To understand “Injunctive Relief” contract clauses, let’s start with some basics:

A Brief History –

Many years ago, we used to have two kinds of Courts, one kind called “Law Courts,” in which people or companies sued each other for money, and the other kind called “Equity Courts,” in which people or companies sued each other for “equity,” which is another word for “fairness.” Suing for “fairness?” “Fairness” lawsuits generally seek a Court to Order someone to do something or stop doing it. Perhaps injunctive relief can be best illustrated by this example:

Suppose two farms sat next to each other for 200 years. Many years ago, property deeds would often describe property boundaries as “from the oak tree to the edge of the pond,” or “the boundary line is the stream.” Using the “stream-boundary” example, suppose one day a big storm deposits so much rain that the stream overflows, and makes a new path, which now cuts one of the farms in half.

Did the original farmers intend the boundaries of the two farms to be changed whenever a big storm came around? Or was it their intention to use the stream path only as a convenience, and later disregard the effects of droughts, storms and even beavers? Did the deed say “wherever the stream might meander?” If two farmers could not agree on who owns how many acres, and one started to till the soil on the disputed land, the other could go to Court asking the Judge to Order him to stop, and declare whose land it is.

Granting “Injunctive Relief” is entirely within a Judge’s Discretion. –

Years ago, the two kinds of Courts were combined into today’s Courts, but we can still seek either “money damages” or “equitable relief.” In today’s employment law, “injunctive relief” is commonly sought by employers seeking a Court Order to (a) stop a current or former employee from sharing or using “trade secrets” or (b) stop a former employee from violating a non-competition agreement.

When employees seek Injunctive Relief (which is not very common) it is most often to seek a Court Order demanding a former employer stop interfering with the employee’s new employment, or disparaging the former employee.

Whether or not to grant such Injunctive Relief is entirely up to the Judge, who must decide if it is necessary and if it will impose an undue burden on the freedom of a person to work and earn a living. The Judge looks at many different things to decide what is fair, and two Judges could easily differ on that conclusion. He or she actually “weighs” the effect on both parties, in what is actually called a “balancing of the equities.” It literally is “the scales of justice” in action.

Such Provisions are usually “toothless tigers,” but any kind of “tiger” can seem scary. –

The important point here is that Courts hardly ever give much credence to what the employer and employee agreed in a contract months or years earlier regarding what the Court should do. It is the facts, events and circumstances at the time that a Court is concerned with.

So, you may ask, “Why does an employer insert an Injunctive Relief clause into an employment contract, and why would an employee care?” In my experience, Injunctive Relief clauses are instruments of fear, nothing less and nothing more.

They are inserted into employment contracts to create the illusion that even a “possible,” “potential” or “threatened” violation of an employment contract will result in a Court Order against the employee, like the Wizard of Oz behind the curtain who really had no power. It is a kind of legal bullying, intended to send an employee the implicit message, “Don’t even THINK of not honoring these obligations!” But, to continue the analogy, you can never be sure a tiger is truly “toothless” unless you get so close to the tiger that you can actually see into its mouth.

No matter what, you should carefully read “Injunctive Relief” clauses, not so much because of what they say, but sometimes other things – potentially risky or expensive to you – that may be woven into the otherwise “toothless” language.

WHAT YOU CAN DO: When looking over an employment agreement, read every section and every word, even if it seems to make you sleepy to do so. Don’t be fearful of Injunctive Relief clauses, because they do not represent any real risk to you, but do beware of other items that might be inserted into them:
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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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“I Am Not Restricted” Clause in Offer Letters – Potential Roadblock

Published on October 28th, 2015 by Alan L. Sklover

Be Prepared to Promise It, but Can You Deliver?

“Promises are like babies: easy to make, not so easy to deliver.”

– Anonymous

ACTUAL “CASE HISTORY: It happens at least once a week. A client contacts us quite pleased to have received a job offer, and asks us to do a “simple review” of the offer letter or employment agreement. The client’s request is almost always a sensible one, because almost always their job title and salary have been agreed upon, and everything else seems to be just “the usual stuff.”

My first question is often “Are you sure you can take the job?” Said differently, “Are you totally unrestricted?” The client’s response is usually a quizzical look, or simply, “What do you mean?”

I explain that many of my clients have accepted job offers they have no legal right to accept, and thus cannot fulfill the duties they have promised to fulfill, all because of one or more agreements they entered into with their present (or even former) employers.

To retain their employees, more and more employers are setting up “legal roadblocks” on their employees’ paths to working elsewhere. (I guess giving them raises is not as popular.) As a result, the number of non-competition clauses and agreements, non-solicitation clauses and agreements, non-interference clauses and agreements, “garden leave” requirements, minimum notice provisions, and other such restrictions is surely on the rise.

Such “restrictive covenants,” (a legal phrase for “agreements to restrict one’s freedom”) can be found in many places, including offer letters, bonus award agreements, commission plans, promotion letters, stock or equity plans, and even, at times, employee handbooks. Every now and then the client learns that he or she cannot take the job offer they have tried do so hard to get.

The problem is this: more and more employers are requiring that new employees promise in writing that they have never signed any agreement that would “restrict” them on the new job. When I ask if they have, most of my clients tell me either “I don’t think so,” or “Maybe, a long time ago.”

The real practical concern is that we will miss such a agreed-to restriction, and two weeks after the new job starts, the new employer get what we call “The Letter” from the former employer’s lawyer that says, in large, legal words “You must fire your new employee because he/she is violating an agreement not to work for you, or not to do what he/she is doing for you.” Ouch! There goes that new job. And, making matters, worse, the firing by the new employer might be considered for bad conduct. Double ouch!!

LESSON TO LEARN: Whether or not you are looking for a new job, it is wise to carefully consider whether or not you have complete or partial “new job freedom.” You never know when some recruiter just might call you, or you might meet someone at a conference who is interested in hiring you. It’s always good to know if you are entirely free to take a new job, or restricted in some way, and if so, in what ways.

If you are taking a new job, you should expect that you will be asked to sign an agreement or clause that says something like the following:

“I hereby promise and certify to XYZ Company that: (a) I have the unrestricted right to enter into this agreement, and to perform all of my anticipated duties, (b) I have never signed any agreement, clause, covenant or promise for any former employer that would prohibit or in any degree restrict, detract or affect my doing so.”

Your failure to take the time and make the effort – before you go to any interview – to be entirely clear on this issue can only delay your taking a new job, or worse, could get you fired for taking it. But, like we always say, “Forewarned is forearmed.” And, as Benjamin Franklin said, “Those who fail to plan, plan to fail.”

WHAT YOU CAN DO: To keep yourself aware of the restrictions, if any, that prohibit or restrict you from taking new jobs, here are a five pointers:
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“Can I fight a non-compete dispute in Court without an attorney?”

Published on October 23rd, 2013 by Alan L Sklover

Question: I’ve just received a Summons to Court. A dry cleaner I worked for until last month is suing me for $15,000 claiming I breached a non-compete. First, I don’t think I ever signed one. Second, I’ve opened up a laundry that does not compete with any dry cleaner. I’ve recently begun a “dry cleaning pick up” service, but it only picks up and delivers it does not do dry cleaning. Third, the dry cleaner I worked for sold his business and it is now owned by someone else. Fourth, even the amount of the dry cleaning I’ve picked up is maybe $500, nothing like $15,000. Fifth, even my wife was sued and she has nothing to do with my business. Lastly, the lawsuit even claims I stole goods and services, which is nothing less than crazy. 

I have no money to defend this. Is there something I can do?

Michael
Pompano Beach, Florida 

Answer: Michael, Your letter reminds me a good deal of a former client of mine who I will call Larry. Larry was sued by his former employer for breach of a non-compete and, just like in your situation, it was without any factual basis at all. Oh, the former employer’s lawyers made all sorts of allegations, but when the facts became known the allegations didn’t make a bit of sense. I did help him get the lawsuit dropped, but I believed then, and I believe now, that he could have done most, if not all, of the defending on his own. I think you might be able to do that, too. Let me explain:    

1. Each of your “six points of defense” sound, in and of themselves, like a pretty good defense to what the lawsuit alleges. Even without legal training, you seem to have a pretty common-sense-based view that what is being alleged is a bunch of baloney. There is not much “magic” in the law. Instead, it is based in common sense and simple fairness, although it sure can look and sound complicated. It is not complicated, just full of procedures and words that are foreign to you. Never be afraid – especially in a Court – to respectfully say, “I would appreciated it if you would tell me what that word (or phrase) means.”   

2. If you have “crossed the line” of competition at all, it might be that you have “directly or indirectly engaged in the dry cleaning business” by your pick up and delivery service. I have not read your non-compete agreement – assuming that it is something more than a charade – but if there is a non-compete agreement that you somehow signed, it probably uses language like that language in quotes above. If it does, there could be a valid argument to be made that your pick up and delivery service is “indirectly engaging in the dry cleaning business.” While some might think that is a violation, I think you have better argument that, no, it is a pick up and delivery service, not a dry cleaning business.  

After all, Fedex picks up and delivers jewelry and no one would say Fedex is in the jewelry business, right? And Norfolk Southern Railway picks up and delivers automobiles, but no one would accuse that railroad of being in the automobile business, right?

3. I have many times seen former employers bring former employees to Court claiming breach of non-compete without any legal basis whatsoever, just as a scare tactic; I urge you not to be frightened. As I noted above, my former client Larry was faced with a situation like yours. Prior to Court I insisted on seeing the so-called proof they claimed to have that he stole documents and clients. Well, when we got into Court, they had to admit they had no such things; it was nothing but hot air, a bluff, a fraud. They sure did frighten Larry, and cost him a few thousand dollars for my services, but in the end his former employer and its lawyers backed off entirely.  

4. Courts seem intimidating to non-attorneys, but they are quite respectful of people who stand up for themselves, despite not having legal training. As a general rule, I think you will find most Court personnel and Judges quite respectful and helpful if you try to handle this problem on your own. In fact, I’ve seen many Court personnel and Judges near “bend over backwards” to give people without legal assistance every possible courtesy and helpful hint. I urge you to consider going to Court on the designated day and at the designated time, and explaining what happened to the Judge – especially your “six points of defense” mentioned above, as well as the fact that you don’t have the money to hire an attorney. I assure you it’s not as scary and much easier than you might think.  

At least for the first few Court appearances before a Judge, I encourage you to stand up for yourself, at least until you can find out – and the Judge will be interested, too – if the dry cleaner has any (a) non-compete you signed, (b) any documents or witnesses to claim you are in the dry cleaning business, and (c) proof that he has lost any customers – in law, we call that “whether he has sustained any damages” – due to your pick up and delivery service. 

5. Judges do not at all like keeping people out of work without a very good reason to do so. This simple fact is not sufficiently appreciated by employees who fear non-compete lawsuits, or who get involved in them. It is true everywhere: Judges just don’t like keeping employable people unemployed, unless there is a very good reason to do so. If, for example, you did (a) steal equipment, (b) take with you and use a secret chemical formula, or (c) took with you a list of customers and tried to gain their business, to protect your former employer, a Judge might Order you to “back off” at least for a period of time, to permit your former employer to rebuild what is rightfully its own. But where, as in your case, no such bad conduct took place, you really have little if anything to fear from going in front of a Judge, and speaking the truth.  

6. We offer a “185-Step Guide and Checklist to Non-Compete’s” with a good number of pointers on standing up for yourself at this time, even in Court, and without a lawyer. It is sure easy for me to say, in that I have legal education and legal experience, but if you (a) organize your thoughts, (b) speak up slowly and clearly, and (c) ask to see the other side’s (i) documents, that is, the document you allegedly signed, and (ii) the other side’s “proof of damages,” I think you just might beat the other side’s lawyer at his or her own “game.” 

Our 185-Point Master Guide & Checklist to Non-Competition Agreements is a perennial favorite. It takes you step-by-step through everything you need to know. To obtain your copy, just [click here.] Delivered by Email – Instantly! 

7. Sadly, some lawyers start lawsuits to intimidate others, without any proof that anyone did anything wrong. One time, in Court, on just such a case, the other side’s lawyer said he had a tape recording of a conversation in which my client told a colleague that he was going into his own business and planned to compete with the employer. My client said to me, “That is crazy. That is impossible. I never said any such thing.” So, I said to the Judge, “Your Honor, can we listen to that tape recording?” He said, “Sure, and I would like to hear it, myself.” 

The other attorney said, “Well, Your Honor, I don’t have the tape recording here, but I have a transcript,” to which the Judge looked awfully skeptical. “Okay,” the Judge said, “Let us read the transcript.” Well, the transcript was nothing at all what was alleged; it simply contained two employees talking about how much they both felt underpaid and hated their jobs. The Judge said, quite softly, “Counselor, where is your case?” to which the other lawyer said, “Well, Your Honor, if they said this on the recording, can you imagine what they said when they were not being recorded?” It took about ten seconds for the Judge to say, “Case Dismissed.”  

I truly believe that people can do an awful lot to help themselves in employment-related matters, including non-compete disputes. That is what this blog is all about. Please don’t act out of fear, don’t act out of intimidation by the legal system, and don’t let others “walk over” you. Most Judges are quite smart, do care about people, and don’t like to let lawyer’s abuse people, especially people who have done nothing wrong, as I sense you have not.

Michael, I really do hope this proves helpful, and you will stand up for yourself, your family and your right to open your own laundry business. I really do.  

My Best,
Al Sklover 

P.S.: If you would like to speak with me directly about this or other subjects, I am available for 30-minute, 60-minute, or 120-minute telephone consultations, just [click here.] 

Repairing the World –
One Empowered and Productive Employee at a Time™

© 2013 Alan L. Sklover, All Rights Reserved.

“Can an employer pick and choose who must sign a non-compete?”

Published on August 7th, 2012 by Alan L Sklover

Question: Can a company pick and choose who they go after and make sign a non-compete agreement? Is there any precedent if a company pursues one person, while not pursuing others in similar circumstances?

Jay
Alanta, Georgia

Answer: Dear Jay: As is so often the case, the answer is a kind of yes-and-no, depending on the facts and circumstances, and what may be in the hearts and minds of the employer’s decision-makers. Here’s the story:

1. As a general rule, employers are free to make their own choices of every kind. Those who make the laws (that is, legislators) and those who interpret and enforce the laws (that is, judges) are always reluctant to tell others what they must do, or not do. So, the presumption is always – unless there is a very good reason to do otherwise – employers are free to impose whatever obligations, restrictions and conditions they choose upon their employees, and that includes those related to non-competition agreements.

2. The basic reason for the wide latitude afforded employers is the acknowledgement that legislators, judges and juries simply don’t know the in’s and out’s of every business, or every employment relation. An employer may feel that only one of its employees needs to sign a non-compete, because it is only that one employee who (a) could possibly “steal” away valuable customer relations; (b) could possibly understand the value of a secret formula he or she is dealing with; or (c) could even attract other employees to work for a competitor. That is a business judgment, that might not make sense to others, but only to that employer.

The employer may be right, the employer may be wrong, but we have an equal opportunity in this society to succeed or fail, based on our judgments.

3. Don’t feel it is unfair, because employees generally have the exact same freedoms in how they deal with their employers. Yes, yes, I know, it doesn’t seem at all “equal” or in any way “a level playing field.” Employers seem to have the upper hand. As an employee advocate my entire life, I know that. But as an employee advocate for over 30 years, I have also seen many, many employees have the upper hand, too, and so I see the employment relation as one that is not an easy one, but one that can be successfully “navigated and negotiated.”

In fact, I have seen employees prevail in negotiating non-competition agreements when they have (a) refused to sign it, (b) insisted on limits on it, or (c) demanded extra payment for it. It all comes down to what “perceived value” the employee has to the employer.

4. The “general rule” of considerable employer freedom regarding non-compete agreements does, though, have limits set in the law. As with every freedom, there are limits. You’re free to go fishing, but there are usually limits on the number or size of fish you can catch. You’re free to marry someone, but not six people at once. You’re free to take a walk, but not in the middle of busy traffic. Every freedom has limits. So, too, with an employer’s freedom regarding non-compete’s.

An employer cannot choose who must sign a non-compete on the basis of age, religion, disability, race, gender, military status, national origin, in some places sexual orientation, and other “protected categories” of people.

An employer cannot choose who must sign a non-compete agreement by who is willing to engage in criminality, dishonesty, non-consensual sexual relations, or other kinds of prohibited conduct.

An employer cannot choose who must sign a non-compete in violation of an agreement it has entered into by which it has agreed not to do so.

An employer cannot choose who must sign a non-compete by who it believes is incompetent to understand what they are signing.

An employer cannot choose who must sign a non-compete in certain places in violation of “public policy,” which is commonly considered “the general welfare.” This might be the case where there is a severe shortage of doctors, and an agreement limits the ability of a doctor to work in that area.

And there are lots and lots of other limits on this freedom too, depending on the facts and circumstances, and what is in the hearts and minds of those who are making the decisions about who must sign a non-compete.

Jay, so often I wish I could give a simple “yes” or “no” answer. And so often I simply cannot. Life is so often just not “that way.” That said, I hope this clarifies things about non-compete’s for you. 

Best,
Al Sklover

P.S. One of our most popular “Ultimate Packages” of forms, letters and checklists is entitled “Ultimate Non-Compete Package” consisting of five Model Memos and Letters, that assist in navigating and negotiating non-compete agreements, and our 185-Point Guide and Checklist to Non-Compete’s. To obtain a complete set, just [click here.]  

Repairing the World –
One Empowered and Productive Employee at a Time ™

© 2012 Alan L. Sklover, All Rights Reserved.


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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