Spend a Penny, Save a Pound

Two news articles came across my desktop today, both with a chilling message for employers out there. They come with two messages.

Here’s the first message: hire an employment lawyer.

And the second? I mean it. Hire an employment lawyer.

The first article is about a celebrity who had a share of a restaurant in Los Angeles. (The size of the share is apparently under dispute but that’s neither here nor there.) An employee sued the restaurant claiming sexual harassment by a manager. She won $6,000 in actual damages last week and this week the jury awarded her $100,000 in punitive damages. As a result of the verdict, the celebrity decided to close and sell the restaurant. I don’t know the layered facts of this case, other than what was covered in the media, but we don’t need to know much more than this:

  • protect your assets
  • ensure your employee handbook has a strong anti-harassment policy
  • regularly train your employees and managers that harassment of any kind is not permitted or condoned

The second article is much more scholarly, a decision from the Kentucky Supreme Court regarding the enforceability of a non-compete provision. An employee had worked for his company for sixteen years before being asked to sign a non-compete agreement. The employee signed it; after he subsequently went to work for a competitor, the (now former) employer sued him and his new employer. The Kentucky Supreme Court held that the agreement was non enforceable, because the former employer had not given the employee “consideration” for signing such a restrictive covenant. That is, contracts involve a quid-pro-quo — you paint my fence and I’ll give you $10. (It’s not too big of a fence.) However, you can’t demand that I give you that $10 without something of value on the other end as well.

Oregon law strongly disfavors non-compete provisions, particularly for employees who are currently working for their employers. In fact, the only time of employment in which an Oregon employer can impose a provision (and only, of course, if the other elements are met) is upon “subsequent bona fide advancement.” What does this mean? It means that an employer can’t merely look up from sorting grapes and hand everyone currently working in a winery a non-compete provision. It means that such a provision can only be handed to an employee when that employee has, for example, been promoted to new duties and new assignments. (And again, there’s a host of other requirements, but that’s a topic for another day.)

Best practice if you are contemplating a non-compete?

  • Consider the timing of this venture
  • Hire an employment lawyer
  • Do not inadvertently give your employee the chance to later breach a contract you think will be enforceable

Again, two different articles with one common theme: hire an employment lawyer. After all, spending a few pennies here can result in saving many pounds down the line.