Note from Uncle Dale: Non-Compete Clauses are Cute… Until They Are NOT

Uncle Dale back again!

Questions come in groups. This week everyone wants to about non-compete clauses/agreements. It even showed up on FB interpreters group.

Spring is here! “Big VRS” must be on a hiring binge, because that is when I get these questions. DO NOT TAKE ANY THING I SAY AS LEGAL ADVICE. Go talk to an attorney where you live. This is a blog called Uncle Dale’s Rules for heaven sake. Have you met your uncle? Remember your uncle last Thanksgiving? (If you have questions go talk to an attorney). This is just to get all y’all thinking.

So, what actually is a non-compete clause? It’s just like it says on the label, an agreement with your employer, it could be in writing or verbal or signed, not to compete with the employer after the employment relationship has been terminated.

The point of such an agreement is to make sure that, when you leave that job, you don’t set up shop across the road doing the same thing and using the customer list you took from your old job, or sell the knowledge or skills you acquired on this job to the competition. Makes sense right? You can’t learn the Colonel’s Secret Recipe of herbs and spices then quit and open your own chicken shack, or everyone would do just that and no one would give anyone a job because they would be training and setting up the competition.

The problem is such agreements lead to abuse. If I’m the boss, I want to hire talented people and I don’t want them taking that talent elsewhere-so I make my job offer contingent on an agreement not to work in the same industry or in the same geographic area for 2 years if you quit or are terminated. But the reason I hired you is this industry is what you do. If you can’t do it for two years if you quit then what can you do? You are kind of trapped in this company now, unless you can move outside the geographic boundaries of the agreement or live without a job for a couple of years. This gives license for an employer to mistreat employees because they CANNOT quit.

Because of the potential for abuse courts are suspicious of them generally and not every state allows this kind of agreement under statute. Oklahoma bans them out right. See 15 OK Stat § 15-219A (2014). California doesn’t like them. Its State law says they are not allowed, but in practice they may be allowed sometimes to protect Trade Secrets. Cal. Business & Professions Code sec. 16600. New York is contemplating banning them (more on that later) and Massachusetts is trying to prevent abuse by making it unattractive for an employer to enforce one.

I’m already hearing snoring out there so I will try to spice this up a bit!

Suppose you go to work for a VRS company, they are going to want you to sign all kinds of crap before you can sit in the chair and do your thing. They may want you to sign an NDA (Non-Disclosure Agreement).(As the FCC covers the VRS interpreting part of this by strict legal requirements regarding privacy the NDA covers the workplace itself). You can’t tell anyone outside the company what the office looks like, or the equipment or way you log-in and out of the system… seriously. This stuff is protected. When in doubt just don’t talk about it!

Assignment Agreements… hummm… Proprietary Information and Invention Assignment Agreement, or PIIA for short. That is when you agree that anything you invent or think up while working for them belongs to them. These agreements are iffy, yes, but still may be enforceable. You know what? That is its own Note (I’ve seen these pop up lately in VRS employment agreements). Long story short these are hard for companies to enforce if you can show you created the workshop or did the research on your own time and without company funds or equipment.

Non-Compete Agreements. Ok they could be included in the middle of a whole lot of other clauses in a contract or a stand alone document. Ether way the first thing you need to know is a Non-Compete Agreement is a contract. Even if it’s in the middle of another contract, in some States it is still a separate contract.

What is a contract you ask?

A contract has three parts:

Offer;

Acceptance; and,

Consideration.

The first two are pretty well taken care of the minute you sit your butt in the chair. The third is more complex. Consideration is “the price of the agreement.” Each side is getting a benefit-the company gets your work and you get a paycheck but what are each of you paying for the non-compete? You are paying with giving your right to go work somewhere else and the company? Is giving you a paycheck? But that is for the work you are doing not the agreement not to compete. Remember, that is a separate contractual agreement. Some states say the company has to pay you something separate for that, others say continued employment is the consideration paid by the company. That always seemed like a threat more than a payment but the law is rarely pretty. Check with a lawyer in your own state!!!!

Here is the crux of it. Can a company just require you to sign away you ability to work as a VRS interpreter with anyone else as a condition of employment? No. (Maybe).

Non-Compete Clauses are there to protect from you walking out the door with trade secrets or goodwill (the client’s have not bonded with the company so much as with you and will follow you out the door) or with their extraordinary investment in training or education. These are the things a Non-Compete is supposed to cover.

So. Ask yourself VRS interpreter, what do you have when you leave that you did not have when you walked in?  I don’t mean to offend but VRS interpreters are like fast food workers, we are not getting and McDonald’s secrets that we are selling to Burger King. You come, you do your job, you go home. We really came in with the skills to do the job and have the same skills when we leave. (Don’t get too comfortable wait till we talk about Jimmy Johns!)

Do you have a customer list?

No.

Do you have any special knowledge about the algorithm or programming or mechanics of how VRS works, I mean technology wise, that you could sell to a competing VRS company?

No.

Are customers going to change VRS provides because you stopped working for one and started with another?

No (they don’t even know your name).

Did the VRS provider train you to interpret or did they hire you because you already knew how? Is there a unique or secret interpreting technique used by THIS VRS company that others are just DYING to get their hands on?

No.

Last but not least, did they invest a great deal of time and money in your training?

Maybe.

Did they pay for workshops? Did they pay for your certification testing? That is where it gets sticky. Courts will likely have to decide if the amount they invested makes the Non-Compete enforceable or not.

So, in places where Non-Compete agreements are allowed there are some general rules to how courts test if it is valid or not.

Courts want to know if the Non-Compete agreement is a product bad faith in the negotiations, in other words is the company using this for an illegitimate purpose (indentured servitude-you can’t leave so we don’t have to pay you well or treat you well);

Is the non-compete agreement necessary to protect legitimate business interest (is there really something you could walk out the door with that would hurt our position in the market or help our competitor);

Is the agreement reasonable in time, space, and scope; and,

What is the consideration of hardship (does it say you can’t work in this field anywhere in the whole country forever or just within 5 blocks for 2 years?)

The new sort of catch-all I am seeing in the case law is the simple question “would enforcing the non-compete agreement just be bad policy.”

For example in New York the court agreed that Jimmy Johns could enforce its Non-Compete agreement which stated that after an employee left they could not work for a competing sandwich maker, or any company that derived more than ten percent of its income from putting meat and cheese inside of bread, if that business is located within 3 miles of a Jimmy Johns, and for two years.

Think about that. What trade secret would a Jimmy Johns employee have? Jimmy Johns are so prevenient that the 3 mile rule covers most of the US. MacDonald’s-out, Burger King out. Any restaurant that serves subs or wraps-out. According to the New York court you could not work at an amusement park that sold food or bowling alley if the snack bar sold sandwiches if there was a Jimmy Johns within three miles. What if your company has cafateria? It would depend on if the cafateria constituted at least 10% of the businesses earnings.

I tell you all of this this because I have worked in VRS and other industries that have required Non-Compete agreement.

I signed them.

I signed them because the difficulty in enforcing them makes the chances the company will try minimal. Moreover if the company does try, in the current environment, the company will likely lose.

On two occasions I have actually received very stern cease and desist letters telling me I could not work at the place I was, or was going to, work.

I wrote the attorneys back on both occasions. I told them how adorable I though their cease and desist letters were, explained what a Non-Compete Clause was, wished them all the luck in the world in enforcing it and told them where they could stick it.

But I’m me. And it’s fun to be me.

Talk with an attorney before you sign one, but don’t lose a ton of sleep.

Last comments. After the New York court supported Jimmy Johns, the New York legislature started working on making such oppressive non-compete clauses illegal. Jimmy johns was sued in several other states and after having to pay out hundreds of thousands of dollars (over 100,000 in Illinois alone) had dropped its non-compete agreement from its conditions for employment.

Massachusetts has been trying to pass a law that says if a company tries to enforce a Non-Compete agreement it must pay 100% of the former employees highest pay rate for the duration of the time the employer is not to work in the industry (didn’t pass this time but keep trying Massachusetts!)

I know I make even the shortest story long but the point of all of this is Non Compete clauses are generally disfavored. But don’t treat them lightly.

http://big.assets.huffingtonpost.com/FACExhibitA.pdf

Rule 222

For hearing people, the term “Name Sign” is just two familiar words stuck together to create confusion. 

Rule 208

Interpreters’ two most common afflictions are:

a) Carpal Tunnel; and,

b) Pickadamnworditis.

Note from Uncle Dale: HR 620 

Hello One and All!  It’s your Uncle Dale.  This morning I was on a Radio Show discussing my concerns with HR 620 (there is actually another Bill that could be just as bad, but it has no text currently-just a name HR 1493) and I realized that I should really take a minute and send out a warning to all of you.

As you may or may not know I have strong opinions about the weakness of the ADA when it comes to protecting the rights of people who are Deaf (I believe the term I used this morning was “barely functional”). This legislation would pretty much end the ADA’s thin layer of protection for the Deaf community.

The bill proposes to change Title III to say this:

(B) BARRIERS TO ACCESS TO EXISTING PUBLIC ACCOMMODATIONS.—A civil action under section 302 or 303 based on the failure to remove an architectural barrier to access into an existing public accommodation may not be commenced by a person aggrieved by such failure unless—

“(i) that person has provided to the owner or operator of the accommodation a written notice specific enough to allow such owner or operator to identify the barrier; and

“(ii)(I) during the period beginning on the date the notice is received and ending 60 days after that date, the owner or operator fails to provide to that person a written description outlining improvements that will be made to remove the barrier; or

“(II) if the owner or operator provides the written description under subclause (I), the owner or operator fails to remove the barrier or to make substantial progress in removing the barrier during the period beginning on the date the description is provided and ending 120 days after that date.

“(C) SPECIFICATION OF DETAILS OF ALLEGED VIOLATION.—The written notice required under subparagraph (B) must also specify in detail the circumstances under which an individual was actually denied access to a public accommodation, including the address of property, the specific sections of the Americans with Disabilities Act alleged to have been violated, whether a request for assistance in removing an architectural barrier to access was made, and whether the barrier to access was a permanent or temporary barrier.”.

Understand the problems this causes.  1) Right now, often the only reason a company takes any interest in whether or not it is ADA compliant is because if it does not, it can be sued at any minute.  It therefore behooves said company to be proactive in its compliance with the ADA.  But if this Bill becomes law, no business need worry about investing one moment of thought in its complaince becuase unless and until its get a letter, it has no risk of a suit. If it recieves a letter the business has another four months to address any actual possible changes if it writes a letter back after 60 days. This will effectively end any personal responsibility by companies for their own accessibility; 2) The responsibility on enforcing compliance has, more or less, always been with the persons protected by the ADA (people with disabilities) but now they are turned into unpaid federal inspectors. Not only are they faced with a barrier but they must be able state chapter and verse the specific sections of the law that were violated and verify that they already requested the business to comply (which, if you think about it makes the letter redundant because they have already made the request); and, 3) It is not enough under this Bill for a person with a disability just to have noticed non-compliance or a barrier to access, the persons who are supposed to be protected by the law now must be able to specify in detail how they were actually denied access (this is insidious wording as it goes beyond just the idea that the business was not compliant, a person with a disability must defend that the lack of compliance actually denied them access). Think about this. What other law do you know where in the law says “businesses must X” and you see a business that has not X, but the law is not effective until the business has caused you injury personally by not X.

Think of a business that has exposed wiring but you cannot complain about it unless you get shocked and then warn the business. Or is structurally unsound but is not required to fix it unless it collapses on you. Or has rats running around in the kitchen but you can’t file a complaint unless it made you personally sick. You see a business that is not ADA compliant you can’t file a complaint unless you can show that you needed to patronize that business and couldn’t. Their defense is, “you could have just ordered it online we did not have to serve you.” Even if I see a store that sells something I will need but do not need today, I must go to the store and actually be denied access prior to beginning the process to enforce compliance.  Or lets suppose that I want to go to a resort and I can see from the pictures is not compliant, I may not be able to begin the process of enforcing compliance until I go on my vacation because:

a) I have not actually been denied access until that moment; and,

b) I have only seen pictures and my not have a complete idea of the full extent of the violations.

It takes the ability to fix an issue prospectively and relegates it to retroactive. In one way it places other disability groups in the disfavored position that persons who are Deaf have faced since the ADA became a law.  They have never had a good avenue to fix an issue before injury under the ADA. But now…

Looking specifically at the Deaf community.  If a person who is Deaf has a doctors appointment and requests an interpreter and the doctor says no (we’ll just write back and forth… it’ll be fine I do it with all my hearing impaired patient’s) the Deaf person will currently lose if they sue, because the law does not give them any authority to choose their own auxiliary aid and does not afford a right to an interpreter, only effective communtation (I know you only communicate in ASL and writing has never been effective to you at any time… but who knows this time it just might work!) So the “Futile Gesture” doctorine is all but unavalible to persons who are Deaf (yes, the irony of something called the futile “gesture” doctorine being unavalible to people who are Deaf has not escaped me!)  So, the patient who is Deaf must actually go the appointment and have communication fail.  Once that is done the person who is Deaf must, of course, request an interpreter again. If the Doctor refuses… NOW the Deaf person can sue.

If the HR 620 becomes law, the Deaf patient can write a letter to tell the Doctor the exact section of the law the doctor violated and then wait four months to see if the Doctor will or will not provide the interpreter before they can sue.  That is just as good as taking the razor thin protection the ADA somewhat affords currently and trashing it.

Please write your representative in Congress to say NO to both the ADA Education and Reform Act of 2017, H.R. 620, and the ADA Lawsuit Clarification Act of 2017, H.R. 1493! Look here to download a template letter from NAD (make the changes necessary if you are an interpreter so it matches your role and you can find your Representativehere.

Do it today!

HOWARD: Hi! Some of you may have noticed the trending hashtag: #protectADA. You may wonder why the ADA needs protection. That’s right, right now, there is a threat to the ADA. Some of you may remember my AHA video last September about a House bill, the ADA Education and Reform Act, with a different bill number because it was submitted during the previous Congress term – and it failed, luckily. However, the bill has returned with the same language with a new bill number in this new Congress term. Another Representative submitted a second bill on the same issue. The ADA Education and Reform Act’s new bill number is H.R. 620. The other bill uses similar language and is known as the ADA Lawsuit Clarification Act, H.R. 1493. Both bills are similar to each other and to last year’s failed bill. These bills ask that a deaf person or a person with a disability who experiences lack of access to a business, restaurant, hospital, and other places cannot file a complaint or lawsuit right away. They must first send a letter about the lack of access to the business. The person must send the letter and wait for accommodations and changes to be made. Then if there are no accommodations or changes made the second time, the person has the right to file a complaint or sue. This does not make sense because the ADA was passed in 1990, 27 years ago, and everyone should already know how to follow the ADA after so many years. The bill failed last year yet people are trying this again. We must stop them by letting them know these two bills are not okay. Whether you send via letter, email, fax, or social media – use the template we provide and send that to your Representative. The new template is modified from last year for you to use for the two new proposed bills. Download the template, add your name and edit the text with your information, and send! We need your help to ensure these bills will fail. Congress must know why the ADA is important to us and to protect our rights. #protectADA. Thank you.

Video fades to a soft white background with several different font types showing “NAD” very quickly. Copyright video ends with the National Association of the Deaf (NAD) logo centered. Blue text below the logo appears, “A production of the National Association of the Deaf (copyright) 2017 All Rights Reserved”.

Rule 191

Don’t “fact-check” the Client!

Every true story has two parts: the true part and the story part. 

(I DON’T CARE that you were there! It’s not your story!)