Amanda DeMatteis: Hi Josh.
Josh Goodbaum: Hi, Amanda. What are we talking about today?
DeMatteis: I thought we would talk about non-competes.
We talk about non-competes a lot, and the reason for that is because they come up in our practice a ton, and they take on a lot of different forms, meaning potential clients come to us with questions about non-competes that are really far-ranging.
Let’s pick a lane for today. Let’s say an employee comes to you and they say, “Hey, I quit my current job, took a new job, and verbally negotiated part of my agreement with my new employer. That included a non-compete that’ll apply if I leave this new employer.” But now the employee is a few months into their new job, and their employer has done an about-face. The employer basically says, “Hey, Employee, you know that verbal agreement we had about your non-compete? Well, here’s a written non-compete.” And it turns out the new non-compete is much more onerous.
This client comes to you, Josh, and says, “What do I do now? I had this verbal agreement.”
What do you tell them? What’s best practices? What do Connecticut employees need to know?
Goodbaum: Well, what they really want to know, Amanda, is what can I do now? And the answer is not very much. Let me try to explain why.
The first thing you can do is: you can leave your new job. But, of course, you already left your old job and you don’t have your old job to go back to, in all likelihood, and so the new job becoming really uncomfortable, maybe even becoming unavailable, is not a great recourse for you.
The second thing you could do in theory is, sue your employer or force them to fire you. You could say, I’m not gonna sign your new non-compete, I’m not gonna agree to your new terms. The new employer might fire you, and then maybe you have a cause of action for breach of the implied covenant of good faith and fair dealing related to the verbal contract that you previously negotiated. But that’s a very uphill climb.
Likewise, you might have a claim for wrongful discharge in violation of public policy if there is something unenforceable about the new non-compete they’re trying to impose upon you. But non-competes are very rarely black and white; there’s just a whole lot of gray. And so in all likelihood, this new non-compete that they’re bringing to you is not going to be fundamentally unenforceable, so you’re gonna have a really hard time bringing a wrongful termination claim, and that leaves you with not great options.
I don’t like to tell clients about the thing that they should have done, but the thing my client should have done – and this is an important lesson for every employee – is:
Negotiate, memorialize, and sign your employment agreement – including your non-compete – before you start your new job and before you leave your old job.
So when you are negotiating about a new employment arrangement, you want to discuss the terms of your employment with your potential employer and then you want to memorialize that agreement in writing. And then, very importantly, you want to have an employment lawyer look at that agreement. Only then do you sign the new employment contract. And only after you do all of that do you give notice to your current employer – soon to be your former employer – and change jobs.
So, best practice: Negotiate, memorialize, have a lawyer review, and then sign your new contract to make sure you understand exactly what your rights are, exactly what your obligations are, and that all of that is solidified before you give notice and before you go to a new job.
DeMatteis: This is really good advice, Josh. No one likes a Monday morning quarterback, but this is really important.
Non-competes and other restrictive covenants are the time to be proactive, not reactive.
A common mistake that we see employees also make is they say, “Hey, I signed this non-compete when I took on this new job, but that’s not enforceable, right?” Wrong. Non-competes in Connecticut are currently enforceable.
If you are presented with a non-compete before you take a job, you need to talk to an employment lawyer about that. Don’t just sign on the dotted line. These things are really tough to get out of sometimes, and it may cost you a lot more than you think.
Goodbaum: You’re so right, Amanda. The questions I get about non-competes are almost endless, they take on all kinds of combinations and permutations, and unfortunately, I’m not able to give precise, confident answers to many of those questions because the law about non-competes in Connecticut and almost every other state is so unsettled.
DeMatteis: Thank you, Josh.
Thank you so much for watching.
We’ll see you next time.