Over the holiday, the Court of Appeals issued a couple of employment-related decisions regarding situations that often come up.
- Non-Compete Agreements/Competition with Former Employer
In Curry’s Transportation Services, Inc. v. Dotson et al., the Court of Appeals addressed the enforceability of a non-compete and competition with a former employee. Since I want to address two cases in this post, I’m going to give the cliff notes rather than dissect the whole case.
- Non-compete agreements are unenforceable if they are unnecessary to protect the business interest. CTS’s information did not require protection. Its customers were not confidential. It priced its service the exact same way all trucking companies price its service—rates were generally standardized across the industry. Business in the trucking industry is not dependent upon personal contacts and relationships or confidential information. CTS did not require most of its drivers to sign non-competes and/or confidentiality clauses. All these factstogether led the court to find that the non-compete was unenforceable. Again, it was all the factsthat led to the conclusion. Simply requiring employees to sign a non-compete will not make it enforceable. There must be a legitimate business interest that needs to be protected.
- Preparation to form a competing business is generally lawful unless an individualized harm to the former business beyond additional competition results from the preparation.
- The Office Romance
In Roche v. Davenport Cleaners et al., the facts circled around a volatile romantic relationship between two co-workers that led to the termination of the female co-worker. Both employees engaged in derogatory speech towards each other, finally resulting in a physical altercation initiated by the female co-worker. After termination, the female co-worker filed a sexual harassment and retaliation suit against the employer. The employer was found not liable because the court determined that the female co-worker engaged in the name-calling and harassment and that the conduct was based on the relationship between the parties, not because the plaintiff was a female. Let’s see what steps can be taken to prevent this expensive lawsuit.
- Determine if you will prohibit or limit romantic relationships between co-workers. Will you prohibit all romantic relationships? Will you transfer those involved in romantic relationships to different departments? Once you’ve determined if a policy is necessary, put it in writing, distribute it to your employees and train your employees.
- Respond appropriately to harassment/misconduct in the workplace. Davenport Cleaners knew what was happening in the workplace. It was aware of the name-calling between the two individuals. From the facts presented in this case, it appears that Davenport Cleaners did little to prevent/rectify the situation. When complaints are made (even if the employee does not “want to get the harasser in trouble”) take action. Investigate and discipline when necessary and as appropriate. Don’t let the problems get out of hand.
Happy New Year!