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111 Non-Solicitation – Customers During the Restricted Period, the Employee shall not, either directly or indirectly as a stockholder, investor, partner, employee, consultant or otherwise, solicit business of the same or similar type being carried on by the Company or any of its subsidiaries and affiliates, from any person or entity known by the Employee to be a customer or prospective customer of the Company or any of its subsidiaries and affiliates
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212 Non-Compete - Broad NON-COMPETE AGREEMENT. Employee agrees and covenants that for a period of two years following the termination of this Agreement, whether such termination is voluntary or involuntary, Employee will not directly or indirectly engage in any business competitive with Employer or solicit company customers. This covenant shall apply to any geographical area covered by any office of the Company or territory that the Employee worked in within the last two years. Directly or indirectly engaging in any competitive business includes, but is not limited to, (i) engaging in a business as owner, partner, agent, consultant, or independent contractor (ii) becoming an Employee of any third party that is engaged in such business, (iii) becoming interested directly or indirectly in any such business, or (iv) soliciting any customer of Employer for the benefit of Employee or any third party that is engaged in such business.
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313 Non-Compete – More Narrow Employee agrees that while he is employed by the Company and during the two (2) years immediately following termination of his employment for any reason Employee shall not, directly or indirectly, as an individual, proprietor, partner, stockholder, officer, employee, director, consultant, joint venturer, investor, lender, or in any other capacity whatsoever, engage in, become financially interested in, be employed by or have any business or professional connection with any business that competes with the Company in the marketing and/or sales of commercial floor cleaning services and products in ___________________ counties in Massachusetts, and ____________________________ counties in New York. Provided, however, that Employee may own any securities of any corporation which is engaged in such business and is publicly owned and traded.
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414 Non-Compete – Most Narrow Limitation of Practice; Non-competition: The parties agree that Employer's business is local in scope and that Employer would suffer serious damage and loss of goodwill if, upon termination or expiration of this Agreement or any renewal thereof, Employee competed with Employer by providing veterinary services for clients who reside within the practice’s trade area or currently are regular clients of Employer. It is understood that the restrictions contained in this Agreement are necessitated in part because of the time, effort, and resources required to acquire Employer’s business, its continued development and maintenance, and in the event that Employee’s relationship with the business is terminated, the additional time and effort necessary to replace Employee.
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515 Non-Compete – Most Narrow Therefore, as a material inducement to Employer to enter into this Agreement and pay Employee the compensation and benefits offered, and in exchange for the professional education, experience, and training to be obtained while working for Employer under this Agreement, Employee agrees that during the period of this Agreement and any renewal thereof, and for a period of two years after Employee ceases to be employed by Employer for any reason, Employee will not:
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616 Non-Compete- Most Narrow (a) render, offer to render or attempt to render veterinary services for, (b) serve as an independent contractor for, (c) own, manage, operate or control, (d) be employed by, participate in or have an interest in, or (e) be connected in any manner with the ownership, management, operation or control of,
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717 Non-Compete – Most Narrow Any business or profession, including that of a mobile practice, engaged in veterinary services similar in scope to those provided by Employer within a ________air-mile radius of Employer's practice location(s) during the twenty-four (24) month period immediately preceding Employee’s last date of employment. Employee acknowledges that the following is a non- exhaustive list of practices/entities covered by this restriction:________________
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818 Additional Provisions There are certain provisions that should be considered: Consideration, describe consideration provided at time of initial hire, consider a clause providing that additional consideration is not needed despite changes in position, compensation, responsibilities, etc. Consider a tolling provision: time for non-solicit/non- compete is tolled during the period of any breach Provision clarifying that the agreement supplements, rather than replaces, statutory and common law obligations (e.g., trade secret law) Provision requiring employee and permitting employer to show agreement to potential subsequent employer Agreement should apply to subsidiaries/ affiliates/ successors/ assigns Provision reflecting intent to enforce and “blue pencil” if necessary
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919 Additional Provisions Provision defining the confidential information/trade secrets at issue Provision restricting the jurisdiction/venue for enforcement (including any claim by employee for declaratory judgment) Consider adding arbitration provision if confidentiality is a real concern (including right to expedited discovery and relief) Provision permitting a new employer or former employer to “buy out” of their restrictive covenant (“pay to play”) Provision providing employee with compensation during the restricted period (“garden leave”)
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10110 Additional Provisions – Remedies Remedies may also be spelled out in an agreement: Irreparable Harm - acknowledges that breach will cause and entitle employer to seek and obtain injunctive relief Attorneys’ Fees - if the employee is found to have breached the agreement, employee pays the cost of establishing the breach and otherwise enforcing the agreement, including the cost of any investigation Forfeiture - conditions the receipt of certain benefits/compensation (particularly deferred compensation) on the promise of non-competition Liquidated damages - may simplify enforcement and litigation
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11 HIRING A RESTRICTED EMPLOYEE
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12112 The Flip Side – Considerations When Hiring A Restricted Employee Employees have common law obligation regarding former employer’s confidential information, irrespective of whether they have a restrictive covenant with their former employer Employers need to protect against violation of restrictive covenants and inadvertent “infection” with a competitor’s confidential information “It’s not the crime – it’s the cover-up” – courts act in equity when issuing injunctions for violations of restrictive covenants. Conduct such as hiding information, destroying documents, deleting files are bad facts for the former employee/new employer.
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13113 Acknowledgment of Obligations Clause I acknowledge that I have informed the Company of, and agree to provide to the Company a copy of, any restrictive covenants my former employer may believe or claim exists between me and my former employer. I have also been instructed by the Company not to use, disclose, upload or otherwise bring to the Company any of my former employer’s confidential information or trade secrets.
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14 ENFORCEMENT, BRIEFLY
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15115 Two Sides Of The Argument Presumably, no employer wants to steal another company’s legitimate trade secrets, but there is a tension: Former employers want to protect their information and relationships when an employee leaves BUT New employers want to leverage an employee’s “tool box” of knowledge and the new employee’s “personal relationships”
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16116 Initial Strategy Issues Former Employer What is the employer’s largest concern? Goals? Initial fact gathering critical. Identify trade secrets/confidential information at issue Any “bad” conduct? New Employer Taking the “high road” early on may minimize risk (e.g., limit work done by new employee) Proper onboarding may also minimize risk
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17117 Legal And Strategy Issues Initial handling of trade secret or restrictive covenant issues often focuses on attempts to get leverage through legal arguments, including: Testing the enforceability of the contract, both as to whether it is a valid contract and whether it is being enforced too broadly Challenging whether there is a legitimate interest at issue, or whether the goal is to stop legitimate competition
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18118 Consideration Former Employer If contract signed at beginning of employment, employment is good consideration Need to address subsequent changes in employment as potential arguments that consideration lapsed New Employer Acquisition may void, as may other changes in the employee’s job
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19119 Scope Of Contract Former Employer Identify legitimate business interest Narrower argument can be stronger Employee not prevented from making a living New Employer Prohibits ordinary competition Information not “secret’ Relationships/goodwill owned by employee, not former employer Time/geography too broad
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20120 Litigation Former Employer TRO v. PI Notice or Ex-Parte Need for expedited discovery New Employer Agree to some limitation and seek full hearing (and discovery) Counterclaims Segregating employee
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