Ask The Lawyer, NO WAY OUT?
NO WAY OUT? BOSS THREATENS TO SUE WORKER IF HE LEAVES FOR BETTER JOB
QUESTION: I work as an aide at a home health agency. I haven’t had a raise in two years, so I started looking around for another job. I was offered a similar position at a different agency a couple of weeks ago. When I went to give notice to my boss, she said I could leave if I wanted to, but if I worked for another home health agency in Oakland, Wayne or Macomb counties any time within the next three years I would be sued for violating a noncompete agreement, which I didn’t remember signing. I decided to play it safe and turn down the other job, but the whole situation seems really unfair. Is there any way to get out of this agreement?
ANSWER: There may be a way out, and it will probably involve talking to a lawyer.
Noncompete agreements are intended to protect an employer’s interest in customer relationships, confidential information, trade secrets and intellectual property, and were designed to prevent workers from taking secret processes or client lists and using them to a competitor’s advantage. Traditionally, the agreements applied only to upper-level workers who had access to this kind of information.
As you experienced, that’s no longer true.
In the past decade, employers have been routinely including noncompete agreements in their hiring documents — that stack of papers you sign after you have accepted a job – for workers at all skill levels, from vice presidents to janitors. A 2016 study found that one third of noncompete agreements are signed after a job applicant has accepted an offer, and only 10 percent of employees have negotiated over the agreements. Many workers, like you, are not aware they have signed them, yet one fifth of the working population is bound by a noncompete agreement.
The effect of this indiscriminate use of noncompete agreements is not limited to individual workers. In states were these agreements are usually upheld, overall wages tend to be lower as workers stay in one job, with fewer raises, for a longer period. It is harder for workers to negotiate a pay raise if they know they can’t leave to work for another employer. The timing of when the noncompete agreement is made also impacts wages: Workers presented with a noncompete before accepting a job offer earned 9.7 percent more and received more training than those who are asked to sign after they are hired.
Recently, noncompete agreements for lower-level employees have come under tougher scrutiny. The attorneys general for New Jersey, Massachusetts, California, Illinois, Maryland, Minnesota, New York, Oregon, Pennsylvania and Rhode Island, New York and the District of Columbia are currently investigating noncompetes at several fast-food businesses, including Arby’s and McDonalds. Seven companies have agreed to do away with the agreements for low-level workers. Courts in some states have been less inclined to find such agreements enforceable. A few states have passed laws limiting the scope of non-compete agreements and the workers to whom they apply and one state – California – holds such agreements void.
Michigan allows noncompete agreements, as long as they are “reasonable as to their duration, geographical area, and the type of employment or line of business.” MCL 445.774a. The geographic limitation must be no greater than is “reasonably necessary to protect the employer’s legitimate business interest.” Superior Consulting Co v. Walling, 851 F Supp 839, 847 (ED Mich, 1994). In terms of the type of employment, a non-compete can prohibit a worker from using specialized knowledge gained on the job to give a competitor an unfair advantage, but it cannot prevent a worker from using “general knowledge or skill.” While Michigan courts have upheld agreements restricting a worker’s mobility from six months to three years, the shorter terms are more likely to be viewed as reasonable.
The non-compete agreement you describe is probably unenforceable: There is nothing specialized about the skills required of a home health aide (pretty much the same skills required from one job to another), the three-year term seems very unreasonable, and the geographic restriction is likely much greater than needed to protect your employer from any possible harm. Non-compete agreements are supposed to protect employers, not give them regional monopolies.
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By: Daniel A. Gwinn, Esq.