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From Free2Ride to Funknuggets, Doug I have a question...(7 posts)

From Free2Ride to Funknuggets, Doug I have a question...funknuggets
Oct 27, 2003 3:50 PM
Hey...

You said something really interesting in your response to Free2Ride's (aka Kristin) ex-employers use of the word "disparaging". That is really interesting. Let me drop this on you.

Im just a contractor, so this does not apply to me, but all the people that got axed around me, it universally does. They indicated in the "town hall" meeting that as a condition of severance, they (the laid off employees) could NOT find employment with a competitor. So, basically, while they are actively getting severance checks (length differs depending on years of service), the employee could not actively work for a competitor. Otherwise they would OWE the money they already were paid and forfeit any future severance payments. That sounds like a non-compete. But, is that enforceable, especially if it was not signed as a condition of their initial employment? Because, it is not like they are getting a lump sum severance, they are getting paid like they are working: benefits, 401 contributions,everything.

Second question is how on Earth would the company find out? I would think that a competitor would do themselves justice by hiring the person, and then just not telling the previous company, causing the previous company to bleed cash?

Im really, really, confused as to how the company (namless unless you want to ask) can do this, or enforce this. What are your thoughts?

Thanks in advance,
Chris
contractDougSloan
Oct 28, 2003 7:41 AM
That's not a non-compete (which are enforceable in some states). Severance pay is by contract, or agreement. "If you don't take pay from another job, I will pay you severance. If you breach that contract, I don't have to pay (and you might have to reimburse me)", is how it goes.

Besides, the company is attempting to "do the right thing," at least a little, by giving you severance. Normally, they are not required to. It is to help you while you find another job. To take that money and money from a new job would be wrong.

Whether they will find out is not something I can help you with. Companies frequently check references, though, so that could be a source of the old company finding out.

Their plan sounds perfectly legit.

Doiug
Non-competesms
Oct 28, 2003 7:55 AM
I have done a fair amount of non-compete litigation. The first thing that you have to understand about non-competes is that the law varies from state to state. Some states are very hostile to the enforcement of non-competes and others enforce them readily. In some states, an employee has to get new "consideration" for a non-compete to which he or she agrees after the commencement of employment. In other states, continued employment (or in the facts you have posted, continued pay)is sufficient consideration to support a new non-competition agreement.

The situation that you describe is something that UK employers call "gardening leave." That is, your former (or soon to be former) employer will pay you to do anything (e.g., gardening) except to work for a competitor. I have not heard of too many US companies using "gardening leave" on a widespread basis. Although I know of examples with highly placed executives.

Insofar as your second question is concerned, you would be surprised how companies find out that a former employee is working for a competitor. Common ways include tips from your customers (i.e., the former employee solicits your customer on behalf of his or her new employer and your customer tells you), your employees (i.e., the former employee's "friends" who still work for you rat on their "friend."), seeing your employee at trade meetings, etc. It may be easier to go undetected if you are in a job in which there is little interaction with the public. But, I wouldn't take the chance

(DISCLAIMER: Although I have represented employeees trying to get around non-competes, I usually represent employers who are trying to enforce restrictive covenants. So, take my comments with a grain of salt).
you Brits put American euphemisms to shame! ;-)DougSloan
Oct 28, 2003 8:04 AM
What do they do there -- walk into your office and handle you some gloves and a shovel? How perfectly thoughtful. ;-)

Doug
Sound advice, thanks all... I will pass on to the masses. (nm)funknuggets
Oct 28, 2003 8:41 AM
"comments" not "advice" . . .ms
Oct 28, 2003 10:04 AM
You asked for "comments" not "advice." Given that I do not want to get in hot water with the bar authorities where you live, my malpractice insurance carrier, my partners, etc., I want it to be clear that I gave you "comments" not "advice." If someone is making a decision with respect to the package that he or she has been offered, he or she should speak to a lawyer that knows the applicable law, knows the personal situation of the person and knows all of the facts. It is easy to make comments on a situation, it is not so easy to give advice. There are a lot of nuances to situations like the one you described that cannot (and should not) be answered in a vacuum.

I appreciate your thanks and I hate to sound like a lawyer with this post. But, I am what I am.

I always am willing to give comments (at least when I have enough time to be lurking around here). But, "advice" is a different matter.
Agreed...funknuggets
Oct 28, 2003 12:02 PM
Remember, it wasn't for me. I just said I'd check something for a few of my coworkers who just thought it sounded kind of fishy, but actually... I think they are just looking for a way to get back at the company that just whacked them. So, the general consensus I got from you and Doug is that it is 'typically' legal. So, I just passed that information on and they can do what they want with it.

I appreciate it.

Chris