“I Am Not Restricted” Clause in Offer Letters – Potential Roadblock

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:

1. Keep vigilant for any restrictions that might exist on your “employment freedom.” To do so, you should try to collect, review, and make a file of copies of, the usual workplace documents that might just contain the restrictions we are concerned about. They include: (a) offer letters; (b) bonus agreements; (c) commission agreements; (d) stock (or equity) awards and plans, (e) promotion letters, (f) non-competition and non-solicitation agreements (often mislabeled as “Confidentiality” or “Trade Secret” Agreements, (g) employee handbooks, and (h) so-called “Garden Leave” agreements.

For sure, it’s a lot of work and, worse, a lot of “legalese,” so having an attorney do so for you might be a worthwhile “preventive” project.

Want to speak with me directly about these subjects? I am available for 30-minute, 60-minute, or 120-minute telephone consultations, just [click here.] Evenings and weekends can be accommodated.

2. If you are in sales, marketing, business development, or other direct, client-facing roles, you are at higher risk for such restrictions. No one can “own” a client relationship. However, employers sure do try to make it impossible for employees to resign and take a client’s business with them. For this reason, an Account Representative is more likely to have been required to sign a non-compete agreement than is a Facilities Manager. Likewise, a Sales Manager is more likely to have been required to sign a “Garden Leave” agreement than is an IT Supervisor. It is the customer and the customer’s business that we all fight over.

Received from your former employer’s attorney a “Cease and Desist” Letter? Concerned you might receive one? We offer a Model Letter entitled “Response to Attorney’s ‘Cease and Desist’ Letter Alleging Non-Compete Violation.” It shows you “What to Say, and How to Say It.™” To obtain a copy for your adaptation and use, just [click here.] It shows you “What to Say, and How to Say It.”™ Delivered by Email – Instantly!

3. You might consider asking former colleagues who have previously resigned whether they signed any “freedom-restricting” agreements that made their job transitions difficult. It should come as no surprise that asking Human Resources whether you ever signed a document restricting your freedom to work elsewhere might be a perilous thing to do. It would not shock me if doing so ended up noted with CAPITAL LETTERS in your HR file, or underlined in a memo to your Supervisor.

A different approach used by some of our clients successfully has been to ask colleagues who left your employer (a) whether they had any disputes or difficulties making their employment transition, and (b) whether they had faced the problem of having signed a “freedom-restricting” agreement of any kind. The experiences of others can be helpful in assessing the experience you will likely encounter. As is said, “The more data, the better the decision.”

4. Asking that “To My Best Memory” be inserted can only help. In an offer letter or employment agreement, there is a very big difference between “I promise and certify that I have not signed any restrictive agreement . . . , “ on the one hand, and “I promise and certify that TO MY BEST MEMORY that I did not sign any freedom-restricting agreement.”

The latter gives you is so much more limited in its reach, and therefore provides much more room to preserve your reputation for honesty and integrity should a problem arise. Asking that those four words be inserted into the agreement – because “No one can remember everything” – is a suggested approach to take.

5. If you have signed a non-compete or other freedom-restricting agreement, you may well be able to devise a plan to negotiate it away, or to limit its effects on your “job freedom.” Those who have signed non-compete agreements, non-solicitation agreements, garden-leave agreements, and other freedom-restricting agreements should not consider themselves unable to break free if they want to. There are some very good approaches to take to successfully negotiate your way to limit the effects of those agreements, or to defeat them entirely. Doing so well in advance of any anticipated job-search effort is always a wise precautionary step to take. Don’t forget: Noah built the Ark while the sun was shining.

Have a Non-Compete holding you back? You might want to proactively seek a resolution of your non-compete dilemma with your former employer before a legal dispute arises. We offer a “Model Letter: Proactive Attempt to Prevent a Potential Non-Compete Dispute” that shows you “What to Say, and How to Say It.” To get your copy, just [click here.] It shows you “What to Say, and How to Say It.”™ Delivered by Email – Instantly!

P.S.: 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!

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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. Wisely be aware of any likely difficulties in job transition is one important part of path to job and career success.

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.” That’s 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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