One size most certainly does not fit all when it comes to noncompetition agreements. Every state has its own requirements when it comes to the enforceability of employee noncompetition agreements. In some, such as California, noncompetition agreements are unlawful by statute. In other states, such as Colorado, noncompetition agreements may only be enforced in certain specific settings, such as the sale of a business. In many states, however, noncompetition agreements will be enforced if they protect the company’s legitimate business interests and are reasonable in time, geographic scope and the scope of the limitations on the employee’s ability to perform his profession. Where noncompetition agreements are not void as a matter of law, they are great fodder for litigators because there is no uniform definition of “legitimate business interest” and no consistent test to determine if the time, geographic scope and the scope of limitations on the employee’s ability to perform his profession are “reasonable.” These criteria are very fact and case specific.
Although most litigation of noncompetes focuses on whether the business interests of the employer are “legitimate,” and/or if the geographic and temporal scopes of the limitations are “reasonable.” Equally important to the enforceability of a … Keep reading
After putting all of the specific deal points into a new contract, you are just about finished. All you have to do now is add in the “Miscellaneous” section with all of your boilerplate provisions like force majeure, choice of law and a few others. You have drafted so many contracts for so many years that you do not even know where some of these boilerplate provisions came from, let alone remember all of the implications of each. Even more dangerous, there may be some boilerplate provisions on which you rely that may not be as enforceable as you think. Take, for example, a standard clause appearing in many contracts stating the following: “Nothing in this Agreement is intended to create any enforceable right in favor of any non-party to this Agreement.”
For sure there is no downside to including such a clause in a contract. Indeed, Professor Corbin, one of the preeminent authorities on contract law has said, “If two contracting parties expressly provide that some third party who will be benefited by performance shall have no legally enforceable right, the courts should effectuate the expressed intent by denying the party any direct remedy.” (Corbin on … Keep reading
Many are familiar with Juliet’s tribute to Romeo: “What’s in a name? that which we call a rose By any other name would smell as sweet.” In the context of employees and independent contractors, however, Juliet is quite wrong. As I discussed in a prior post, it can be perilous to misclassify workers as independent contractors, and, under the Massachusetts independent contractor law, workers are deemed employees unless all three of the following criteria, commonly known as the “ABC” Test, exist:
- the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and
- the service is performed outside the usual course of the business of the employer; and
- the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
Further, misclassifying an employee as an independent contractor could trigger violations of other laws, with the Massachusetts Weekly Payment of Wages Act (“Wage Act”) (and its mandatory treble damages and attorneys’ fees) being the most treacherous.
… Keep reading