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

 
“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:

1. First, don’t be intimidated; just read the contract in front of you to your best abilities. The most important thing to do with any contract (whether presented to you or signed by you in the past), no matter how confusing it may seem, is to read it carefully to the extent you can. Don’t be intimidated by strange-sounding words, phrases or titles. I admit to having “mind-blocks” of my own, but when I feel that way I try to bear in mind that even a little understanding is better than none.

One of the primary purposes of this blogsite is to give you the very best understanding of what you may encounter in the course of your “work life,” and, we hope, to give you the “level playing field” you deserve.

2. Watch out for any language requiring the employee to pay the employer’s legal expense for “seeking” injunctive relief or words to that effect. One thing to watch out for – and object to – is if a contract clause labeled Injunctive Relief provides that the employee must pay the employer’s legal fees. It is bad if it says, “if the employer prevails in Court.” It is even worse if it says “for seeking a Court Order,” which means, “whoever wins.”

Your response should be “Please either take that out, or make it mutual. This presumes that, if there is any problem, it is my fault. We are both human, and therefore, capable of making mistakes.” So long as your “objection” is respectfully presented, you have a good chance of winning on this point.

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3. If the language entitles the employer to Injunctive Relief for “any breach of this agreement,” as distinct from any breaches of specific, crucial obligations, it will almost always be ruled ineffective. Judges do not look kindly upon requests for “Injunctive Relief” because it requires them to move quickly, make important decisions in a rush, do a lot of legal work, perhaps hold a hearing on short notice, and their decisions are very vulnerable to being appealed to a higher Court. When they see an Injunctive Relief clause that seems to permit the employer to bring to their Court almost any dispute, they are particularly wary of granting the relief requested.

4. Request mutuality in the entitlement of injunctive relief, but don’t worry if the request is not granted. Very often Injunctive Relief provisions permit only the employer to request Injunctive Relief to address claims it cares about. We suggest you request that the right to do so be mutual. This request is likely to be turned down, and not critical if it is, but it is worth making the request, nonetheless.

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In Summary . . .

“Injunctive Relief” clauses in employment contracts claim to give an employer the right to a Court Order to stop an employee from breaching certain employment contract provisions, most commonly (a) confidentiality, (b) trade secret, and (c) non-compete obligations. They are, in most instances, “toothless tigers,” and not to be worried about. That said, employees should read them carefully for additional provisions inside such clauses, particularly any regarding legal expense and mutuality.

P.S.: If you would like to speak with me directly about this or other workplace-related subjects, I am available for 30-minute, 60-minute, or 120-minute telephone consultations. (Even 5-minute “Just One Question” calls.) Just [click here.] Evenings and weekends can be accommodated.

SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “out of the box,” and build value and avoid risks at every point in your career. We strive to help you understand what is commonly before you – traps and pitfalls, included – and to avoid the likely bumps in the road. For those reviewing employment agreements, the presence of an “Injunctive Relief” clause should not be reason for concern, just for careful review.

Always be proactive. Always be creative. Always be persistent. Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” Making sure you understand what you are signing is one way to do just that. Learning the “tricks of the trade” is what SkloverWorkingWisdom™ is all about.

*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.

Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.

Sklover Working Wisdom™ is a trademarked newsletter publication of Alan L. Sklover, of Sklover & Company, LLC, a law firm dedicated to the counsel and representation of employees in matters of their employment, compensation and severance. Nothing expressed in this material constitutes legal advice. Please note that Mr. Sklover is admitted to practice in the state of New York, only. When assisting clients in other jurisdictions, he retains the assistance of local counsel and/or obtains permission of local Courts to appear. Copying, use and/or reproduction of this material in any form or media without prior written permission is strictly prohibited. All rights reserved. For further information, contact Sklover & Company, LLC, 45 Rockefeller Plaza, Suite 2000, New York, New York 10111 (212) 757-5000.

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