Employers who want their employees to sign a non-compete clause or other type of restrictive agreement, such as a confidentiality or non-disclosure agreement or solicitation agreement, are encouraged to discuss the specific terms and language with experienced legal counsel. This process requires a deep dive into the legitimate interests of an employer and finding the most effective and sometimes creative way to protect those interests in the narrowest possible way. Because if the non-compete obligation does not stand up in court, it is not worth the paper on which it is written. What about Kentucky? In a landmark 2014 decision, the Kentucky Supreme Court clarified aspects of the non-compete law. However, for both employers and employees, many questions remain about the applicability of such agreements under Kentucky law. Given the importance of non-compete obligations and other restrictive agreements to protect a company`s most critical assets – customers, employees and intellectual property, to name a few – this is a situation where regular “review” with legal counsel may be appropriate. If your company has not recently reviewed its non-compete obligations with a lawyer, or if you are concerned about the impact of the Creech decision on the applicability of your company`s non-compete obligations, SKO`s employment lawyers will be happy to speak to you. How do I know if my company`s non-compete obligations are vulnerable? A Kentucky court said, “We have the power to reform or change restrictions in a non-compete clause if the original restrictions are too broad or onerous.” A non-compete clause in Kentucky restricts a person`s ability to work for a particular industry for a specific amount of time and geographic area. The maintenance of employment is not a sufficient consideration to enforce a non-compete obligation. The parameters of a non-compete obligation must be proportionate to ensure fair protection of the employer without imposing unreasonable hardship on the individual. For assistance with non-compete obligations, labour disputes or employment law issues, please contact Ziegler & Schneider today at (859) 426-1300. Thus, if an employee signs a non-competition clause, the employer must in return waive something of reasonable value. If the employer presents the non-compete obligation at the beginning of the employment relationship, the employer`s consideration is usually the willingness to hire the employee for remuneration, while the employee agrees to restrict access to certain jobs if he leaves.
Problems sometimes arise when non-compete obligations are negotiated after employment begins. If a court finds that a non-compete obligation is inappropriate in its performance, it reserves the power to modify an existing non-compete obligation so that its restrictions are not excessively broad or burdensome for the employee. This is called the “blue pencil” rule. In 2014, the Kentucky Supreme Court clarified that if an employer attempts to impose a non-compete clause on an existing employee without providing additional consideration, the agreement is unenforceable. Prior to 2014, an employee`s agreement not to compete with his or her employer was considered valid and enforceable, provided that the agreement was adequately tailored to protect the employer`s business interests. The Kentucky courts have assumed that maintaining employment is sufficient “consideration” for the employee to support a binding contract. In short, the applicability of the Non-Competition Act continues to evolve in Kentucky. If your company has not reviewed its non-compete obligations with legal counsel, or if you have concerns about the applicability of your company`s non-compete obligations, the lawyers at Commonwealth Counsel Group will be happy to speak to you. In 2014, the Kentucky Supreme Court clarified that if an employer attempts to impose a non-compete clause on an existing employee without providing additional consideration, the agreement is unenforceable.
This was charles T. Creech, Inc. v. Brown. Kentucky does not have a blanket ban on non-compete obligations. The applicability of such a contract depends entirely on its terms and the nature of the transaction. Kentucky courts have reviewed many such contracts and established rules for their enforcement. The first criterion of applicability is whether the parties have exchanged valuables. The items exchanged are called “consideration”. If an agreement is not supported by a mutual exchange of counterparties, it is not enforceable. The courts have held that an offer of first employment or retention is sufficiently taken into account to justify a non-compete obligation. How does Creech change the law regarding my company`s non-compete obligations? The court stated that the non-compete obligation was not part of a collective labour agreement – the employer had not changed or added any terms and conditions of employment other than those imposed after 16 years of association.
The employer imposed the provision on the brown employee, without any requirements or concessions to himself. Since Creech did not have to waive his legal rights or accept a disadvantage, there was no consideration and the court did not enforce the agreement because he was disabled. A second important condition is that the conditions of the non-compete obligation are proportionate taking into account the duration of the prohibition, the nature of the information protected and the geographical scope and duration of the prohibition of other employment. In general, courts have held that a non-compete obligation must not unduly affect the former employee`s ability to seek and accept employment. A Kentucky court struck down a non-compete clause between a laundry service and one of its drivers because the agreement had no fixed duration or limits for the area to which it applied. A fundamental requirement is that an obligation not to compete must be based on considerations, a fundamental but sometimes difficult concept in contract law. Basically, the demand for consideration means that an agreement must be mutual – both parties must give up something in order to regain a benefit. A contract should not be imposed on a party who must make all the sacrifices. In the future, employers would be well advised to review their existing non-compete obligations to ensure that Creech`s participation is not a problem in the event that they need the assistance of a court to enforce their rights. What does Kentucky`s law say about non-compete obligations? In a landmark 2014 decision, the Kentucky Supreme Court clarified the non-compete law in a case called Charles T. Creech, Inc. v.
Brown. The temporal duration and territorial scope of the performance of a non-compete obligation depends heavily on the type of undertaking seeking judicial protection. For a non-compete obligation to be enforceable, it must be reasonable**. The suitability of non-compete obligations is determined by Kentucky courts in three different ways: duration, geographic coverage, and purpose***. The courts have held that non-compete obligations can only extend a restriction far enough to protect the employer`s interests, and not to the point of “imposing unreasonable hardship on the restricted party.” Finally, employees should note that non-competitions are transferable contracts. If a new company buys its current employer, the new company has likely been given the right to enforce the non-compete obligation against the employee of the old company and will have the power to take legal action to enforce the terms of the original non-compete obligation. Anyone who has been asked by a potential employer to sign a non-competition clause can seek advice from an experienced employment lawyer. A qualified lawyer can advise you on whether and to what extent the agreement is enforceable. A qualified lawyer can also provide a professional opinion on the circumstances in which the contract may be enforceable. What happens if an employee receives additional benefits of any kind in exchange for signing a non-compete clause? For example, an employee could receive a promotion, better training opportunities or a salary increase.
A lawyer cannot enter into a non-compete obligation or sign an agreement with an agreement that prevents him from exercising the law. As with any other contract, a valid non-compete obligation must be taken into account for a valid non-compete obligation to exist. In Kentucky, if the non-compete obligation is entered into at the time the employee is hired, the employment itself will be recognized as sufficient consideration for the establishment of a binding contract. If an employee is asked to sign a non-compete obligation after being hired, this may also be enforceable if the employer proves that it provided the employee with additional consideration. It is important to note that the consideration is not just a monetary value and may include other benefits or special training that the employee has received that he or she would not have received without the work for the employer. Given the importance of non-compete obligations and other restrictive agreements for the protection of a company`s most important assets – customers, employees and intellectual property – this is a situation in which regular “review” with legal counsel may be necessary. The Kentucky Supreme Court ruled that the agreement was unenforceable because the employee had received no consideration for the signing.
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