Non-Compete Agreements and Preparing to Compete

Have you ever left a job because you were offered a better position or compensation by a competitor within the same industry? Many people are required to sign an agreement restricting their ability to work in competition to their current employer. These non-compete agreements, when presented at time of hire, during employment, or upon termination, resignation, or layoff, are based on the possibility that an employee might gain a competitive advantage by using knowledge of their former employer’s operations.

As a result, when an individual has decided to leave his or her current employment and transition to a position working for a company which directly competes with his or her current employer, there are contractual issues which must be considered.

During the term of a post-employment non-competition covenant, what are considered to be lawful acts in preparing to transition to working for a competitor and what is unlawful? Where does one draw the line separating lawful non-competitive preparatory planning to compete and prohibited direct competition? There is no definitive answer. Recent New York State case law has shed some light on the issue, however.

“Although an employee may, of course, make preparations to compete with his employer while still working for the employer, he or she may not do so at the employer’s expense, and may not use the employer’s resources, time, facilities, or confidential information.” Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, 813 F.Supp.2d 489 (S.D.N.Y. 2011).

Some examples of unlawful competitive actions include when an employee copies his employer’s business records for his own use; charges expenses to his employer that were incurred while acting in furtherance of his own self-interest; actively diverts his employer’s business for his own personal benefits or the benefit of others; or conspires to bring about the mass resignation of his employer’s key employees.

Although case law varies to some extent, it is clear that the language of the restrictive covenant (the non-compete) will dictate in determining what activities are considered impermissible competition.

Therefore, employers who desire to prevent departing employees from gaining a competitive advantage while still employed as well as employees who wish to learn what acts they are permitted to do in preparing to transition to a job with a competitor would greatly benefit from seeking counsel with the experience and knowledge to properly advise them of their rights.

EEOC Files First Ever Sex Discrimination Suit On Behalf of Transgender Employee

Title VII of the Civil Rights Act of 1964 prohibits an employer from discriminating against an employee based on his or her race, color, sex, religion or national origin (see 42 U.S.C. § 2000e-2).

The U.S. Equal Employment Opportunity Commission (EEOC) alleged in a lawsuit filed today that a Detroit-based funeral home operator discriminated based on sex in violation of federal law by firing a Garden City, Michigan, funeral director/embalmer due to the fact that she is transgender, because she was transitioning from male to female, and/or because she did not conform to the employer’s gender-based expectations, preferences, or stereotypes.

In December 2012, the EEOC adopted a Strategic Enforcement Plan (SEP) for sex discrimination to include “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions…” as a top Commission enforcement policy.

Harris is a funeral home company with multiple establishments in and around the Detroit area. Amiee Stephens had been employed by Harris as a Funeral Director/Embalmer since October 2007. During her tenure, she had always adequately performed the duties of that position.  In 2013, she gave Harris a letter explaining she had decided to undergo a gender transition from male to female, and would soon start to present (e.g., dress) in appropriate business attire at work, compatible with her gender identity as a woman.  Two weeks later, Harris’ owner fired Stephens, telling her that what she was “proposing to do” was intolerable.

The Commission has relied on rationale from well-settled Supreme Court precedent regarding sex discrimination. The Commission and the Court recognize that when an employer considers an employee’s sex in taking an adverse action – for example, if an employer terminates a transgender employee based on its judgment that the employee does not conform to the employer’s stereotypes regarding how someone “born” that sex should live or look – the employer will violate Title VII.

source:http://www.eeoc.gov/eeoc/newsroom/release/9-25-14d.cfm

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