TO:Legal supervisorFROM: Legal InternRE: Jennifer – breachof the covenant not to compete.
Triumph– having knowledge about Jennifer being subject to a covenant notto compete. July 15, 2016
Accordingto the U.S non-compete law, Jennifer signed the covenant not to workfor any of Howell’s competitors within a period of two years afterleaving Howell irrespective of the reason for leaving. Is Jenniferjustified to work as a sales associate at Triumph’s Jewels(Howell’s competitors) immediately after being fired at Howell’s?Was Triumph aware of the fact that Jennifer was bound by anon-compete covenant and was it bound by its provisions for employingJennifer?
Jenniferis not justified to work as a sales associate at Triumph’s Jewelsafter being fired for chronic tardiness from Howell’s. TheNon-Compete Agreement mainly protects the secrets of companies whichJennifer gladly volunteered to get employment (Marx,Singh, & Fleming, 2015)..Before hiring Jennifer, Triumph should have looked at her record andestablished that she was bound by a covenant not to compete. Knowingthat and hiring her binds it to the provisions of the law.
JenniferLawson, a former employee of Greene’s Jewelry, a company thatmanufactures earrings, necklaces, bracelets, and rings, works atHowell’s Jewelry for one week before she is sacked for constanttardiness. Greene’s is a high-end costume jewelry manufacturing anddistribution company with two storefronts and a warehouse in Derry,New Hampshire. “Ever-Gold” is Greene’s primary asset since itdoesn’t scratch, discolor, oxidize and it’s known as “everlastinggold” in the market.
AsGreene’s competitor, Naomi White, Howell’s hiring manager, givesJennifer a job after disclosing Greene’s secret to creating“Ever-Gold” and signing a non-compete agreement, which is a legaldocument. One week into the job, Jennifer gets fired and goes to workfor Triumph Jewels after that as a sales associate. Howell learns totweak the process of creating “Ever-Gold” and begins to producejewelry with the same qualities as “Ever-Gold” and Greene’sfears that Jennifer might disclose the secret to Triumph too.
Theoperative employment and contract law that applies to Howell’s caseis the agreement not to compete. For a non-compete agreement to beenforced, it should act to protect particular interests of theemployer, it has to be reasonable both in scope and time, itsconsistency with the interests of the public has to be unwavering,and it should be sustained by consideration too (Estlund,2006).According to the court, the interests of the employer protectableare trade secrets and the good will of the employer which is therelationship with the vendors or clients. This is a strength ofHowell’s legal claim or defense. Suing Jennifer by a legalagreement she signed makes a strong case because Howell’s is tryingto protect its interests and trade secrets. Triumph Jewels is alsosued rightfully for knowing that Jennifer was bound by the provisionsof the covenant not to compete, but they went ahead to hire her.
Thelaw for wrongful termination determines whether an employee was firedfor proper reasons and provides remedies for cases where an employeeis sacked for the wrong reasons (CCH Australia, 2010). From Howell’sperspective, the reasons for firing Jennifer from Greene’s were notproper in the first place. Jennifer began coming to work 15 to 30minutes late when she became pregnant and despite that she wasproducing results. Her employer never issued a warning before doingaway with her position messing with her emotionally. Jennifer has allthe rights to press claims against Greene’s for wrongfultermination. The case that supports Howell’s position regardingunlawful termination is the fact that the employer failed toacknowledge Jennifer’s hard work and paid her off by laying her off(Swann, L. (2010). Her tardiness became chronic while at Howell’swhich means that she loved Greene’s better.
Beforeproceeding to sue Jennifer and Triumph Jewels, Howell’s needs to beable to establish whether it has a strong case against both of themby ensuring that all the requirements for a non-compete to beappropriate are met. Jennifer countersuing Howell’s puts thecompany in an awkward position denying them tangible evidence oftrade secrets or goodwill disclosed to Triumph. The fact thatJennifer used Greene’s secret of the “Ever-Gold” to acquire ajob at Howell’s, however, is proof enough that she could useHowell’s secrets to getting a job at Triumph due to her desperationbreaching the agreement of the non-compete. Triumph hiring her also,despite knowing that she had signed the agreement at Howell’s,could mean that they had something to gain from her, which couldeither be a trade secret or the goodwill of the two previouscompanies.
ForHowell to win the case filed against Triumph, the company has toprove beyond reasonable doubt that the relationship between Jenniferand her new employer is a valid contractual relationship and thatTriumph knew about the relationship. In addition to that Howell’sneeds to ascertain that Triumph had the intention to induce Jenniferto go against the agreement signed. According to Howell, the contractwas breached so the company will not have a hard time proving that.If the violation caused any damages to the enterprise, Howell’scase would be strong enough. Finding out the necessary facts willmake the case secure and increase the probability of Howell’swinning the legal dispute. The weakness of the case, however, is thefact that Howell’s used Greene’s secrets of the “Ever-Gold”to perfect their jewelry.
Thesituation may have an adverse impact towards Howell’s public imagebecause from the beginning, it was Howell that took Greene’semployee, Jennifer, who already had signed a non-compete agreement atGreene’s and the company is also subject to suit for emulatingGreene’s secret. The public discourse will reflect possible legaloutcomes because when it is a general feeling that one company hascopied the other, and its products stop being popular because itlacks originality, the original bearer of the secret always wins.Howell’s damaged public perception can be alleviated by them owningup to the mistake of stealing Greene’s secret to make betterjewelry and coming up with their secret method of making betterbrands of jewelry. There are no actions directed to Jennifer orTriumph that would be appropriate. Other business practices thatHowell’s should modify to ensure no repeat of such situations infuture include ensuring that they hire employees by merit and not fortheir selfish ambitions. Hiring skilled and creative personnel willensure that new methods of making jewelry are devised making thecompetition fair and just. They should also hire from cities far awayand keep in mind all the facts and laws that form the basis ofemployment have adhered to the letter.
Estlund,C. L. (2006). Between rights and contract: Arbitration agreements andnon-compete covenants as a hybrid form of employment law. Universityof Pennsylvania Law Review,379-445.
Marx,M., Singh, J., & Fleming, L. (2015). Regional disadvantage?Employee non-compete agreements and brain drain. ResearchPolicy,44(2),394-404.
CCHAustralia. (2010). Australianmaster fair work guide.North Ryde, N.S.W: CCH Australia
Neumann,R. K., & Simon, S. J. (2011). Legalwriting.New York, NY: Aspen Publishers. Curry-Swann, L. (2010). Managingequally and legally: A practical business guide to preventingdiscrimination complaints and termination lawsuits.Jefferson, N.C: McFarland.