Employee Survival Guide® - COVID-19 CANCELS ALL NONCOMPETE AGREEMENTS DUE TO IMPOSSIBILITY

Starting point is 00:00:00 Welcome to another edition of the Employee Survival Guide, where you can learn everything your employer does not want you to know about and more. Now, here's attorney Mark Carey. Hey, it's Mark here and welcome to the Employee Survival Guide. Today's topic will be talking about how COVID-19 cancels all non-compete agreements due to the concept of impossibility. You're a free agent and your non-competition agreement is void. That should make you feel less stressed about getting your next job in the very industry you have spent so many years cultivating, especially during this pandemic. Yes, I know your employer made you sign a non-competition agreement when you were hired, but COVID-19 has changed everything. I did not like non-competition agreement when you were hired, but COVID-19 has changed everything.

Starting point is 00:00:47 I did not like non-competition agreements before COVID-19, and I disliked them even more seven months into this pandemic. According to the latest jobs report, the total number of people claiming benefits in all programs for the week ending September 19 was 25.5 million people. If you are a judge presiding over a complaint brought by an employer attempting to enforce a non-compete agreement, would you enforce it against the unemployed employee in the face of these jobless numbers? Answer, no. Regardless of the law related to non-competition agreements, no judge will want to prevent employees terminated without cause from getting a new job. Who is going to pay for the employee's food? Who is going to pay for the employee's mortgage? How is she going to buy medication or diapers? The time has come to

Starting point is 00:01:37 confront the idiotic, senseless, and self-serving practice followed by 50% of all employers to force non-competition agreements on vulnerable employees, especially during this pandemic. We need to protect employees and the income they need right now to survive. We also need to confront employers and demand they stop using non-competition agreements altogether because they are abusive and unnecessary. because they are abusive and unnecessary. Employers are already overprotected by making employees sign confidentiality and proprietary information agreements, which protect against the disclosure of company trade secrets to third-party employers.

Starting point is 00:02:19 Non-compete agreements must be voided due to impossibility. What does impossibility mean in relation to non-competition agreements during the COVID-19 pandemic? Courts generally apply the doctrine of impossibility whenever there is an interference in achieving the purpose of the contract between the parties that is beyond their control, and it was never foreseen prior to entering into the contract. A thing is impossible in legal contemplation when it is not practical, and a thing is impractical when it can only be done at an When impossibility is raised, the court is asked to construct a condition of performance based on changed circumstances. A process which involves at least three reasonable, definable steps. First, a contingency, something unexpected, must have occurred. First, a contingency, something unexpected, must have occurred.

Starting point is 00:03:10 Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered the performance commercially impractical. All employers intentionally manipulate employees to sign non-compete agreements in order to get the job. I call this the take-it- it approach. Employers typically prevent employers from working for a competitor for a period of 12 months after termination, sometimes even longer. Bam! A pandemic hits the U.S. and the world. That's the impossibility event. Massive layoffs follow, covering nearly 40 million people. That's the impossibility event. Massive layoffs follow, covering nearly 40 million people.

Starting point is 00:03:49 By the way, an estimated 1.57 million people work today in the U.S. Of course, we want the economy to return to normal as quickly as possible, and those unemployed workers are part of that economy. If 50% of all employers use non-competition agreements, then we have a major economic obstruction caused by self-serving employers who are deliberately seeking to prevent these unemployed workers from earning a living. Sounds unfair? Because it is. It is impossible for any employee to comply with the one-sided non-competition agreement because they need to put food on the table and just survive. That is the argument I am making and I will make in every court case my firm becomes

Starting point is 00:04:25 involved with. This is a public policy crisis, plain and simple. There exist no current COVID-19 court decisions on this issue, but there are a few cases in the pipeline which we are following. The public, the politicians, and the courts are faced with a major public policy dilemma. Should the courts protect employers for the sake of protection alone, or can they help employees by overriding non-competition agreements entirely? I believe the scales tilt heavily in favor of employees, employed and the unemployed alike. What is a non-competition agreement in 2020? It is a promise the employee allegedly makes without his or her consent with the employer that after they are terminated, they need to refrain from accepting employment in a similar line of work, with a competitive company, or establishing a competitive business, for a specific period of time, in a certain geographic area. A non-compete clause ancillary to a valid agreement is unreasonable in restraint of trade and void as a matter of law if, number one, the restraint is

Starting point is 00:05:26 greater than is needed to protect the business and goodwill of the employer, or two, the employer's need is outweighed by the hardship of the employee and the likely injury to the public. In other words, if you are unable to earn a living because you are sitting on the bench during the non-compete period without pay solely because of the employer's self-serving non-compete, then a court will avoid the agreement. The employer is already protected from the employee because the employer forced the vulnerable employee to sign the confidentiality agreement, the so-called confidentiality proprietary information agreement, which protects against disclosure of company-treated secrets to third-party employers. which protects against disclosure of company trade secrets to third-party employers.

Starting point is 00:06:07 What is the business interest here? The argument in favor of enforcing non-compete agreements is primarily to protect the company's trade secrets, client relations, customer goodwill, and employee training, for whatever that means. However, restraining competition is not a legitimate and enforceable business interest. As I have repeatedly stated, the employer is already protected against disclosures of trade secrets through the confidentiality and proprietary information agreement. The employer's argument that a non-compete agreement is necessary to prevent the disclosure of trade secrets to third-party employers is simply abusive and overreaching. Non-compete agreements violate antitrust law. I argue that non-competition agreements violate Section 1 of the Sherman Act

Starting point is 00:06:50 because every non-compete agreement is an unlawful contract to restrain trade. Section 2 of the Sherman Act makes it illegal to monopolize or attempt to monopolize any part of the trade. You will never hear an argument in any litigation over the attempted enforcement of an employee non-compete agreement that the enforcing employer was seeking to restrain competition of its competitive business. Such a statement and action would constitute an unlawful antitrust action. But we know in reality that's exactly what employers are doing. This conclusion is further supported by the recent statistics that nearly 49% of all employers use non-competition agreements for some or all of their employees. This is a doubling of the amount from 2014.

Starting point is 00:07:34 Non-competition agreements are a tool to kill competition, plain and simple. Do not fall for the argument about protecting the company from rogue employees seeking to damage the employer. This accusation, albeit true in the rarest instances, is specious given the employer may the employee sign an agreement to protect the employer's trade secrets, the so-called confidentiality and proprietary information agreement. If you want more information about this topic, please contact our office, Karen Associates PC, and find us on the web. Thank you for listening, as always.

Employee Survival Guide® - COVID-19 CANCELS ALL NONCOMPETE AGREEMENTS DUE TO IMPOSSIBILITY

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