Feb 7 2023
Begins at 1:30:32 here.
Joshua Goodbaum: Thank you, Chairman Sanchez, Ranking Member Ackert, distinguished Members of the Committee. My name is Josh Goodbaum, and I’m a partner in the law firm of Garrison, Levin-Epstein, Fitzgerald & Pirrotti in New Haven. (Senator Kushner, I’m happy to see you as well.) I’m the Chair of the Employment Law Committee of the Connecticut Trial Lawyers Association, and I’m a former Chair of the Labor and Employment Law Section of the Connecticut Bar Association, as well as many other acts of service and bar participation you can find on my website if you’d like.
I’m speaking today in enthusiastic support of HB 6594, ‘An Act Concerning Non-Competes.’ I will say at the outset I’d be very happy to have a conversation with any Member of this Committee who wants to discuss non-competes. My phone number is (203) 777-4425; please feel free to call me. That’s not marketing – I’m happy to talk with you.
I litigate non-competes on behalf of employees – I’ve been doing so for over a decade in Connecticut – and I want to make just a few quick points.
One is that there is no clarity in Connecticut law about whether any particular non-compete is enforceable. And I should know: I’m the person to whom employees come when they say, ‘I’ve got a non-compete and I don’t know if I can take another job.’ And I read the non-compete and I talk to them and I give them general principles of law, and then I say, ‘Yeah, I’m not really sure. Let’s maybe go to court and try to find out.’ What I also have to tell them is, ‘It’s quite expensive to do so. It’s expensive to hire me or any other lawyer who’s going to advocate for you trying to invalidate a non-compete.’
In most areas of the common law, we get development over time, right? Non-competes in Connecticut are governed by the common law – that means judge-made law – except for a very few areas where there is a statute that governs non-competes. Mostly, non-compete law just evolves over time, case by case, until lawyers and judges can figure out what the rules are.
Non-compete law has basically not developed since the announcement of the Five Factor Reasonableness Test by the Connecticut Supreme Court in the mid-1970s, and that’s because of the nature of non-compete litigation. The cases only really get litigated at the preliminary injunction stage; the cases very rarely get to final judgment. They almost never get to an appeal, and it’s at the appellate courts – the Connecticut Appellate Court and the Connecticut Supreme Court – where this law is made, to try and clarify in what circumstance a non-compete is more or less likely to be enforceable.
You can show me a non-compete that is six months in duration, and I can say ‘That’s definitely not enforceable for the following reasons.’ Or one that’s five years, and I can say, ‘Oh, that one’s got a strong chance of being enforced.’ Even for the lawyers who do non-compete work day in and day out, it’s very hard to know if a particular non-compete is enforceable. For a normal person, it’s practically impossible.
Accordingly, this is an area that is really ripe for legislative intervention. That’s why I think it is so important that the Governor is promoting this bill and why it’s important that this Committee is holding this hearing.
I have many more things I could say about non-competes, and I’d be happy to say them, but I understand there are many people waiting to testify, including a former client of mine, Dylan Marcus, who can talk about his experience with non-competes, which I hope the Committee will find useful.
Thank you for listening to me. I welcome your questions if you have any, and again, I would be happy to speak with any Member who wants to talk about non-competes in Connecticut.
Chairman Sanchez: Thank you. Any questions? Senator Kushner?
Senator Kushner: I mentioned this, I think at the outset, but I’ve always thought of non-competes for proprietary information and yet, I’ve heard that there are low-wage workers now who are being asked to sign a non-compete, or being required, I should say, not asked. And I wondered if you could give us some examples of industries or jobs – jobs in particular – where workers are frequently signing non-competes in order to have a job.
Goodbaum: Thank you, Senator. I can’t think of any industry where I have not seen a non-compete. They are not in every employer, but they’re the kind of thing that’s very difficult to track, because employers don’t disclose their handbooks, they’re not publicly available in most employers, particularly in small and medium employers.
Representative Ackert mentioned a barber, and I’ve consulted a number of people who work in the hairstyling industry, people who wanted to open a barber shop in a neighboring town and said, ‘Listen, I don’t want to poach any employees, I don’t want to poach any customers, I’m not going to solicit anybody. But you know, I’ve been cutting my dad’s hair for ten years, since before I was working at ABC barber shop, and if I go open my own shop, is my dad allowed to follow me and get a haircut from me? You know, there are customers who are loyal to me, who I’ve been working with for a long time who might want to follow me, and it’s important for me not to have to drive too far because I’ve got child care responsibilities, I need to be close to home in case my kids need me, this is just a part-time business.’ There’s all kinds of ways in which non-competes, in my experience, are hampering entrepreneurship and innovation.
So, the barber or hairstyle industry is one. Mr. Marcus, Dylan, is going to talk about his experience as a burgeoning exterminator, and how he had a non-compete that restricted his ability to work as an exterminator in at least lower Fairfield County but, in my view, most of Fairfield County. And the litigation that came from that that ultimately was, thankfully, resolved. But not before Dylan paid me, frankly, money to try to work it out.
I have talked with employees who work in the mechanic industry, or the auto body industry, you know, fixing dents in cars, painting cars – I can’t think of a blue-collar industry or what you might think of as a core American business for working or middle class folks where they’re not faced with issues around non-competes. My exposure might be skewed, because I’m just speaking with the people who do have these issues, not with people who don’t. To me, this is a serious problem affecting a lot of real, working people, and having clarity on this issue would be really useful to those folks.
Senator Kushner: Thank you for that. And thank you, Mr. Chairman.
Chairman Sanchez: Thank you, Senator. Representative Ackert?
Representative Ackert: Thank you, Mr. Chair, and Attorney Goodbaum, thank you for being – I wrote your phone number down, by the way. You said it pretty quick, but guess what? I wrote it down. So, I will be reaching out to you.
Goodbaum: I look forward to your call, Mr. Representative. Thank you.
Representative Ackert: So, my comment was more in the healthcare area. Access to healthcare has always been important to me, and I think all of us that serve in this building, and I mentioned that the physician that left had to set up their office ten miles away from any other location where that health facility had a location. And you know some of our big health facilities in the state of Connecticut, they have offices everywhere. So, to find a location that might be 10 miles – it really did a disservice to the patient as far as I’m concerned. They had to travel to follow their cancer doctor quite a ways more than they typically would for treatments. So, . . . what are your thoughts on that?
Goodbaum: Thank you, sir. Physicians in Connecticut have their own non-compete law; it’s one of the very few areas in which the General Assembly has regulated non-competes. That is at Section 20-14p (as in Peter), and that law says that a physician can be forced to sign a non-compete as a condition of employment, but the non-compete can only last for one year and can only restrict them to practice within 15 miles of the primary site at which they previously practiced.
So, we don’t have a situation in which a large healthcare entity, say Yale or Hartford Healthcare, can prohibit a physician from practicing in more than a 15-mile radius. Now, a 15-mile radius can be a fairly large radius. It’s not driving, it’s usually as the crow flies, that’s how we think of a radius. And that could be inconvenient for some patients, but that is a judgment that the General Assembly has made in 20-14p and, of course, could revisit if it chooses to do so.
I will add that 20-14p, like the bill you’re considering today, is prospective only and not retrospective. So, I still consult with physicians who signed non-competes before – I believe it was 2016 that Section 20-14p went into effect – and those physicians are still struggling with non-competes that say things like, ‘You can’t practice with X number of miles of any place where you practiced in the last five years or any place where our organization has a location even if you’ve never practiced there.’ So, that can be quite inconvenient for physicians, and even more importantly, can be really inconvenient for the patients who need continuity of care.
So, again, that’s a judgment the General Assembly made to make the bill prospective, rather than retrospective only. But I think the details of the physician non-compete law are pretty clear. There’s relatively little uncertainty for the physicians who are subject to it. So, it is more administrable than in almost any other area of the economy, which is governed by the common law.
Representative Ackert: I thank you for that answer, and it is, for the patient, the real issue there. For somebody that has to see regular visits, weekly or bi-monthly, a year is a long time. But thank you for that and I appreciate further dialogue with you.
Chairman Sanchez: Representative Weir?
Representative Weir: Thank you, Mr. Chair. And thank you, Mr. Goodbaum. I, too, did write down your number and would like to be in touch. Representative Ackert is not the only one with a fast pencil. I do appreciate the opportunity to talk about clarity, because I think when – Senator Sampson talked about a private contract between two willing parties, and I do agree with that premise [while] at the same time making sure everyone knows what they’re getting into, that somebody’s not signing something under duress, under fear of perhaps losing out on an opportunity. So, I think I’m open to listening certainly to how we can provide clarity to any of the process that – certainly we don’t want to take away your customer base, but at the same time, we want to make sure that people know where they stand.
You referenced auto body people working on dents, you know some of the mid-level employment – I believe that’s how you described it – auto mechanics. And presumably, some of those people may come in without some of the skills that an employer is going to provide them with – perhaps tools, knowledge, maybe not the secret sauce, certainly and potentially industry skills. And I think for that, an employer has some expectation that they’re not just going to – somebody’s not just going to up and take that knowledge down the road at the first opportunity.
And again, I have to mention that I am currently an employee. I have been a small business owner. In my current position, I had the opportunity to negotiate my salary, my benefits, wages, car allowance, and my non-compete. So, from my perspective, all of those things are up for negotiation [and] should be done so under clarity, upfront, not after the fact, and I’m definitely willing to listen more as we proceed down on this topic. Thank you.
Goodbaum: Thank you, sir. And I would be delighted to speak with you – please call me.
I’ll say for the record: Please take my client base. I’d be very happy for Connecticut citizens and employees not to have to deal with this issue over and over and over again. I have plenty of work to do. So, please don’t worry about me.
I’ll note one more thing for the record, which is: The only sector of the economy that doesn’t have to deal with non-competes at all are lawyers. It’s in our rules of professional conduct that we can’t sign non-competes and that we can’t be bound by non-competes. You know something is fishy when only the lawyers have exempted themselves and everybody else is governed by the laws that we seek to enforce. To me, that’s a sign that something is wrong. I don’t see why the relationship between a lawyer and client is any more important than the relationship between a physician and a patient, or between a therapist and a patient, or with somebody who cuts your hair. These are all important relationships to customers, and everyone deserves the opportunity to earn a living.
I think you raise a good point, Representative Weir, about training. And I think that’s a countervailing factor; it’s one I would welcome the opportunity to consider. But having been trained at an enterprise, having been a new mechanic, a fledgling mechanic who starts working in a garage, doesn’t mean you should be tied to that garage forever. And that’s the functional result of having a one or two-year non-compete on a mechanic. If you can’t go work at another garage within 25 miles, what are you going to do? Take two years off from being a mechanic? Go do something else and then come back to it? That’s not practical for most working people.
So, I tend to err on the side of people able to work and earn a living. I understand there are folks who err on the side of business owners. I think that’s also fair. And ultimately, policy judgments are what you all are elected to make. So, thank you for your time again.
Chairman Sanchez: Thank you. Any further questions? Seeing none. Thank you, sir, for your testimony.
Goodbaum: Thank you.