While it is prudent and advisable to seek the assistance of a corporate or employment lawyer to review a non-compete agreement, non-solicitation agreement, or a document-retention policy before signing, for most people very little realistic options exist other than sign the agreement. In other words, normally the choice left to the employee is: (a) sign the agreement or (2) not have a job. So, for most of our clients, they come to us having just left employment or about to leave. At that point, the agreement is already in place.

This was true of “John”, a client of our firm, who came to Martinson and Beason, P.C. having just left his employment as an insurance agent for a prominent insurance and investment company. John had an executed non-compete agreement that included provisions prohibiting the solicitation of current or former clients of his employer and provisions prohibiting him from keeping documents that are the property of the employer.

John approached us with questions regarding the enforceability of the agreement and what his options were. The enforceability of these types of agreements can, often times, be extremely fact-specific and nuanced. This case was no different. As an initial matter, we advised that even in instances when the non-compete may not be enforceable, that may not keep the employer from trying to enforce them.

For example, an employer may want to use its finances (e.g. deep pockets) to squeeze the former client into submission. So even if the agreement and perhaps the lawsuit may not have much teeth to it, if the employer has the finances and the will to continue to press the lawsuit, often times they can leverage the employee. It is important that the employee be ready to defend herself vigorously and fight for her rights to exercise her trade.

John ultimately resigned from his employer’s insurance company and went to work for a competing company. Within just two weeks of his resignation, the employer discovered that John was working and competing. John then received a “Cease and Desist” letter threating to file suit against John, seeking monetary damages – including punitive damages – as well as a temporary restraining order and an injunction. As is usual in these Cease and Desist letters, the employer accused John of taking and retaining documents and other company property even though that was far from the truth.

The first step in responding to a letter of this nature and its accusations is to immediately meet with and get the advice of an attorney. John contacted us the day he received the letter and we met with him the next day. After having an honest and forthright consultation, we responded to the Cease and Desist Letter with our own correspondence outlining the factual inaccuracies of their accusations and a warning that a lawsuit would be unsuccessful.

Nevertheless, the employer filed suit and sought an injunction. Because John armed us with the proper facts and documentation to support those facts, we were able to avoid the injunction which allowed him to continue to work while we prepared his defense and our arguments. We filed a motion to dismiss in the circuit court making the arguments that dealt with the nuances of this particular agreement including that:

• John was not an employee of the insurance company, but rather an independent contractor and was thus not subject to the terms of the agreement
• Even if John was an employee, he was not an employee of the insurance company when he signed the agreement, thus not subject to its terms
• The geographic restrictions in the non-compete were not reasonably limited
• The duration of the agreement was not limited

Using these arguments in our Motion, we were able to create leverage and show to his previous employer that we had a strong defense to their allegations and that they would not be successful in the long run. We offered a small settlement amount and received a full dismissal of the case.

As part of that settlement, John was able to continue his trade, compete all that he wanted, and – most importantly – provide for his family.

John’s case is just one example of the many employment and non-compete cases the attorneys of Martinson and Beason, P.C. handle regularly. If you are an employer or an employee dealing with issues of non-competes, non-solicitations, post-employment covenants, employment agreements, and document-retention policies, we recommend that you seek the advice of skilled attorneys to review those documents.