For many workers, signing an employment contract with a confidentiality, non-disclosure, non-competition, or non-solicitation clause is a necessary part of accepting and keeping a job. What they don't anticipate, however, is that those provisions can be leveraged against them to restrict employees' rights to challenge unlawful practices and find other work, placing their livelihoods and future employment in jeopardy.
In apparent support of U.S. workers and economic realities, the Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently issued guidelines for human resources professionals regarding anti-competitive hiring practices.
This May, the Obama Administration released a report analyzing the use of non-compete agreements in the American economy, potential issues arising from such use, and the effectiveness of various state responses. This analysis suggests that the misuse of non-competes at various occupational levels places an unnecessary burden on employees, consumers, and the economy.
A New York trial court recently addressed the issue of adequate consideration for a noncompete, finding that now-lapsed stock options were not adequate consideration, nor was continued employment where the agreement stated that the employer maintained the right to terminate the employees at will.
Employees, particularly those with access to sensitive company information, are typically required by their employers to maintain the confidentiality of such information. This requirement may be found in the employee handbook or may be contained in a restrictive covenant agreement, employment agreement, or severance agreement. Violating a confidentiality obligation can have serious consequences, including hefty monetary damages in a civil lawsuit. For one Goldman Sachs employee, however, the consequences were even more severe: Sergey Aleynikov was criminally prosecuted--twice--for taking confidential material with him when he resigned his position. His controversial second conviction was overturned earlier this week.
Arbitration is a common, employer imposed method for resolving employment conflicts without going to court. However, Outten & Golden Partner Wendi Lazar suggests that when an employee is forced by contract to arbitrate rather than sue, arbitration becomes a means for employers to suppress the rights their employees would be entitled to in court.